Consider the following additional information:
|
Static budget variable overhead |
$ 5,500 |
|
Static budget fixed overhead |
$22,000 |
|
Static budget direct labor hours |
550 hours |
|
Static budget number of units |
22,000 |
Great Fender allocates manufacturing overhead to production based on standard direct labor hours. Great Fender reported the following actual results for 2012: actual variable overhead, $4,950; actual fixed overhead, $23,000.
Requirements
1. Compute the variable and fixed overhead variances as guides.
2. Explain why the variances are favorable or unfavorable.