Grand Fender uses a standard cost system and provide the followinginformation:

Static budget variable overhead $ 3,600

Static budget fixed overhead $ 24,000

Static budget direct labor hours 600 hours

Static budget number of units 30,000 units

Standard direct labor hours 0.020 hours per fender

Grand Fender allocates manufacturing overhead to production based on standard direct labor hours. Grand Fender reported the following actual results for 2024: actual number of fendersproduced, 20,000; actual variableoverhead, $5,200; actual fixedoverhead, $27,000; actual direct laborhours, 370.

Requirement

1. Compute the overhead variances for theyear: variable overhead costvariance, variable overhead efficiencyvariance, fixed overhead costvariance, and fixed overhead volume variance.

Begin with the variable overhead cost and efficiency variances. Select the requiredformulas, compute the variable overhead cost and efficiencyvariances, and identify whether each variance is favorable(F) or unfavorable(U). (You may need to simply the formula based on the data provided. Abbreviationsused: AC= actualcost; AQ= actualquantity; FOH= fixedoverhead; SC= standardcost; SQ= standardquantity; VOH= variableoverhead.)

2. Explain why the variances are favorable or unfavorable.