Megan, Inc. uses the following standard costs per unit for one of its products: Direct labor (2.0 hrs. @ $5.00/hr.) = $10.00; overhead (2.0 hrs. @ $2.50/hr.) = $5.00. The flexible budget for overhead is $120,000 plus $1.00 per direct labor hour (DLH). Actual data for the past month show total overhead costs of $225,000, total fixed overhead of $123,000, 85,000 hours worked, and 40,000 units produced.

The fixed overhead production volume variance for Megan, Inc. for the past month (to the nearest whole dollar) was:

Multiple Choice

• $0.

• $3,000 unfavorable.

• $5,000 unfavorable.

• $20,000 unfavorable.

• Cannot be determined without additional information.