The volume variance

24.5 Mortensen manufactures wooden toys. It uses a standard costing system to control costs. The cutting department cuts the shapes which are sold as toy animals. Hardwood: 16.00 Direct labour 30 minutes at $9 per hour: 4.50 Fixed overhead 30 minutes at $4 per direct labour hour: 2.00 Standard cost per unit: 22.50 Fixed overhead absorption rates are based upon monthly fixed overheads of $26,000 and a budgeted monthly output of 13,000 sets of animals. In the most recent month 14,000 sets of animals were made. 8,000 direct labour hours were worked and paid at $9.25 per hour. Actual fixed overheads were $23,000 for the month. Question: (Task 2) Match the possible explanations of the cause of variances to the variance. Volume variance Efficiency variance Expenditure variance Capacity variance Labour productivity was lower than expected Labour productivity was higher than expected Over-absorption of fixed overheads Under-absorption of fixed overheads Fixed overhead expenditure was higher than expected Fixed overhead expenditure was lower than expected Labour worked more hours than expected Labour worked fewer hours than expected (4 marks)