Zaria Manufacturing Limited produces a single product. Fixed production overhead for the period is ₦4,800,000 and budgeted production is 40,000 units. Actual production is 48,000 units and actual sales are 44,000 units. Using absorption costing, what is the fixed overhead volume variance?

The fixed overhead absorption rate is ₦4,800,000 ÷ 40,000 = ₦120 per unit. The volume variance compares absorbed overhead with budgeted overhead: (48,000 – 40,000) × ₦120 = 8,000 × ₦120 = ₦960,000 Favourable, because actual production exceeded budgeted production, resulting in over-absorption.