Original budget for 2009 included $600,000 fixed overhead and $400,000 variable overhead. Labor hours were estimated at 200,000 labor hours. The predetermined overhead rate was $5 per hour.

Actual overhead turned out to be $1,100,000. Actual labor hours were 220,000 which exceeded the standard hours of 210,000 for that volumen activity.

What is the volume variance for overhead?

Volume Variance = Fixed Overhead Budget x Fixed Overhead Applied

Volume Variance = Fixed OH Budget x (Standard Hrs Allowed x Predetermined Fixed OH Rate)


Volume Variance = Fixed OH Budget x Standard Hrs Allowed x Budgeted Fixed OH Variable Planned Mthly Hrs

Volume Variance = Fixed Overhead Budget x 210,000 x $600,000
2 per labor hour

Volume Variance = $600,000 x 210,000 x $300,000


= $1,020,000


What am I doing wrong?