Behring Corporation applies manufacturing overhead to products on the basis of standard machine-hours. Budgeted and actual fixed manufacturing overhead costs for the most recent month appear below:

	Original Budget	Actual Costs
Fixed overhead cost:
Supervision	$4,680	$4,800
Utilities	6,120	5,820
Factory depreciation	21,240	20,720
Total fixed manufacturing overhead cost	$32,040	$31,340

The company based its original budget on 3,600 machine-hours. The company actually worked 3,570 machine-hours during the month. The standard hours allowed for the actual output of the month totaled 3,650 machine-hours. What was the overall fixed manufacturing overhead volume variance for the month?

$267 favorable

$267 unfavorable

$445 unfavorable

$445 favorable correct answer

Volume variance = Budgeted fixed overhead cost Fixed overhead applied to work in process Fixed component of predetermined overhead rate = Estimated total fixed manufacturing overhead cost Estimated total amount of the allocation base

= $32,040 3,600 machine-hours = $8.90 per machine-hour

= $32,040 (3,650 machine-hours $8.90 per machine-hour)

= $32,040 $32,485 = $445 F

Why is it Favorable?