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The following data is given for the Bahia Company: Budgeted production 1,000 units Actual production 980 units Materials: Standard price per pound $2.00 Standard pounds

The following data is given for the Bahia Company:

Budgeted production

1,000 units

Actual production

980 units

Materials:

Standard price per pound

$2.00

Standard pounds per completed unit

12

Actual pounds purchased and used in production

11,800

Actual price paid for materials

$23,000

Labor:

Standard hourly labor rate

$14 per hour

Standard hours allowed per completed unit

4.5

Actual labor hours worked

4,560

Actual total labor costs

$62,928

Overhead:

Actual and budgeted fixed overhead

$27,000

Standard variable overhead rate

$3.50 per standard labor hour

Actual variable overhead costs

$15,500

Overhead is applied on standard labor hours. Question: The factory overhead volume variance is

540 unfavorable

Could you explain why?

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