Answer D is correct.

The fixed overhead volume $($production volume or idle capacity$)$ variance is the difference between budgeted

fixed costs and the product of the standard fixed overhead cost per unit of input and the standard units of input

allowed for the actual output. Budgeted fixed costs for the month were $$100,000.$ The standard cost of actual

output was $$105,000[21,000$ machine hours planned for actual output planned annual FOH $$

$240,000$ planned annual machine hours$)$ FOH application rate$].$ Hence, the fixed overhead volume variance

was $$5,000$ favorable. It was favorable because the budget for fixed overhead was less than the amount

applied to jobs. An overapplication of fixed overhead suggests that output exceeded expectations.