Answer
Production-Volume Variance for June 2014: \$1,608.28 U (Unfavorable)
Work Step by Step
Production-Volume Variance for June 2014:
(Budgeted Fixed Manufacturing Overhead - Overhead Allocated based on Actual Labor-Hours) $\times$ Budgeted Labor-Hours
(\$62,400 - (\$63,916 / 4,536 labor-hours)) * 4,536 labor-hours
(\$62,400 - \$14.08 per labor-hour * 4,536 labor-hours)
\$62,400 - \$64,008.28 = \$1,608.28 U (Unfavorable)
The unfavorable production-volume variance indicates that Esquire Clothing incurred higher fixed manufacturing overhead costs than expected due to a difference in the actual number of labor-hours worked. This suggests that the company's production level was lower than budgeted, contributing to the variance.
