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Baker Company has a standard and flexible budgeting system and uses a two-variance analysis of factory overhead. Selected data for the June production activity follows:
Budgeted total factory overhead costs (for normal production of 10,000 units) $80,000
Actual factory overhead incurred in the production of 9,500 units $78,000
Variable factory overhead rate per unit, 2 hours @ $2.50 $ 5
Standard direct labor hours 25,000
Actual direct labor hours 26,000
The production-volume variance for June is:
a. $1,500favorable.
b. $1,500 unfavorable.
c. $2,000 favorable.
d. $2,000 unfavorable.
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