The following budget data pertain to the Machining Department of Yolkenverst Co.:

Maximum capacity 60,000 units

Machine hours per unit 2.50

Variable factory overhead $3.60 per machine hour

Fixed factory overhead $433,500

The company prepared the budget at 85% of the maximum capacity level. The department uses machine hours as the basis for applying standard factory overhead costs to production.

During the year the Machining Department produced 50,000 units, consuming 127,500 machine hours and incurring $433,500 of fixed overhead. For the current year the department has a production volume variance of:

$3,600 unfavorable.

$7,000 unfavorable.

$0.

$3,400 unfavorable.

$8,500 unfavorable.