Question:
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.