Petra Company uses standard costs for cost control and internal reporting. Fixed costs are budgeted at $36,000 per month at a normal operating level of 10,000 units of production output. During October, actual fixed costs were $40,000 and actual production output was 12,000 units.
Required:
a. Determine the fixed overhead budget variance.
b. Assume that the company applied fixed overhead to production on a per-unit basis. Determine the fixed overhead volume variance.