Consider the following additional information:
|
Static budget variable overhead |
$1,600 |
|
Static budget fixed overhead |
$3,200 |
|
Static budget direct labor hours |
1,600 hours |
|
Static budget number of units |
800 |
Premium allocates manufacturing overhead to production based on standard direct labor hours. Premium reported the following actual results for 2012: actual variable overhead, $1,900; actual fixed overhead, $3,300.
Requirements
1. Compute the variable and fixed overhead variances.
2. Explain why the variances are favorable or unfavorable.