Problem:
Atherton Company uses a four-way analysis for overhead. The following information is available for August for overhead:
Budget units of output 4,500 for August
Budget fixed overhead $33,750/month
Budget variable overhead $6/DLH
Budget direct labor hours 3 hours/unit
Fixed overhead incurred $35,000
Direct labor hours used 14,000
Variable overhead incurred $82,500
Actual units produced 4,400
The company closes all variances to cost of goods sold.
Required:
Compute the four variances for variable and fixed overhead and indicate if they are favorable or unfavorable.