Lagos Textile Mills Plc had the following data for October 2023: Budgeted fixed overhead = ₦12,000,000; Budgeted output = 4,000 units; Actual output = 3,600 units; Actual fixed overhead = ₦12,500,000. What is the fixed overhead volume variance?

Standard fixed overhead absorption rate = ₦12,000,000 ÷ 4,000 = ₦3,000 per unit. Fixed overhead volume variance = (Actual output − Budgeted output) × Standard rate = (3,600 − 4,000) × ₦3,000 = −400 × ₦3,000 = ₦1,200,000 Adverse. This variance is adverse because actual output fell short of budgeted output, meaning fixed overheads are under-absorbed.