### Standard and flexible budgeting system

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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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