Dapice Incorporated makes a single product--a critical part used in commercial airline seats.The company has a standard cost system in which it applies overhead to this product based on the standard labor-hours allowed for the actual output of the period.Data concerning the most recent year appear below: The fixed overhead volume variance is:

A) $5,121 U
B) $5,121 F
C) $21,121 F
D) $21,121 U

The fixed overhead volume variance measures the difference between the budgeted fixed overhead costs and the actual fixed overhead costs incurred during the period. It can be calculated as follows:

Fixed overhead volume variance = (Budgeted fixed overhead rate × Budgeted standard labor-hours) - Actual fixed overhead costs

In this case, the budgeted fixed overhead rate is $50, and the budgeted standard labor-hours are 22,000. Therefore, the budgeted fixed overhead costs are:

Budgeted fixed overhead costs = Budgeted fixed overhead rate × Budgeted standard labor-hours
= $50 × 22,000
= $1,100,000

The actual fixed overhead costs incurred during the period were $1,105,121. Therefore, the fixed overhead volume variance is:

Fixed overhead volume variance = ($1,100,000) - ($1,105,121)
= $5,121 F

Therefore, the correct answer is B) $5,121 F.

Fixed component of the predetermined overhead rate = $76,815/13,500 labor-hours
= $5.69 per labor-hour
Volume variance = Budgeted fixed overhead - Fixed overhead applied to work in process
= $76,815 - ($5.69 per labor-hour × 14,400 labor-hours)
= $76,815 - ($81,936)
= $5,121 F
or
Volume variance = Fixed component of the predetermined overhead rate x (Denominator hours - Standard hours allowed for the actual output)
= $5.69 per labor-hour x (13,500 labor-hours - 14,400 labor-hours)
= $5.69 per labor-hour x (13,500 labor-hours - 14,400 labor-hours)
= $5.69 per labor-hour x (-900 hours)
= $5,121 F