A company's total overhead rate of $3.60 per direct labor hour (DLH) is based on a predicted activity level of 3,900 units (65% of capacity). The standards for producing one unit are: Variable overhead, 20 hours @ $2.50 per DLH; and Fixed overhead, 20 hours @ $1.10 per DLH. During the current period, the company operated at 60% capacity, and incurred actual variable overhead costs of $175,000 and actual fixed overhead costs of $91,000. Flexible overhead budget information follows.

Flexible Overhead Budget	Operating Levels (% of capacity)
60%	65%
Budgeted production (units)	3,600	3,900
Budgeted direct labor (standard hours)	72,000	78,000
Budgeted overhead costs
Variable overhead	$ 180,000	$ 195,000
Fixed overhead	85,800	85,800
Total overhead	$ 265,800	$ 280,800

1. Compute the total fixed overhead variance. Indicate whether it is favorable or unfavorable.
2. Compute the total variable overhead variance. Indicate whether it is favorable or unfavorable.

\begin{tabular}{|l|l|l|l|l|l|l|} \hline \begin{tabular}{c} Overhead Variances at 60% \\ of Operating Capacity \end{tabular} & \begin{tabular}{c} Overhead \\ Rate per DLH \end{tabular} & \begin{tabular}{c} Standard \\ Direct Labor \\ Hours \end{tabular} & \begin{tabular}{c} Standard \\ Overhead \\ Applied \end{tabular} & \begin{tabular}{c} Actual \\ Overhead \end{tabular} & \begin{tabular}{c} Overhead \\ Variance \end{tabular} & \begin{tabular}{c} Favorable or \\ Unfavorable \end{tabular} \\ \hline Fixed overhead variance & & & & & & \\ \hline Variable overhead variance & & & & & \\ \hline \end{tabular}