Mills allocates manufacturing overhead to production based on standard direct labor hours. Mills reported the following actual results for 2018:

Actual number of units produced: 1,000

Actual variable overhead: $4000

Actual fixed overhead: $3,100

Actual direct labor hours: 1,600

Note: 1. VOH Coat Var. $1,600U

Info from E23-18

Murr, Inc. produced 1,000 units of the company's product in 2018, The standard quantity of direct materials was three yards of cloth per unit at a standard cost of $1.35 per yard. The accounting records showed that 2,500 yards of cloth were used and the company paid $1.40 per yard. Standard time was two direct labor hours per unit at a standard rate of$10.00 per direct labor hour. Employees worked 1,700 hours and were paid $9.50 per hour

Mills Inc. Is a competitor of murry, Inc. from exercise E23-18. Mills also uses a standard cost system and provides the following info.

Static budget variable overhead	$1,200
Static budget fixed overhead	$1,600
Static budget direct labor hours	800 hours
Static budget number of units	400 units
Standard direct labor hours	2 hours per unit

Figure out and analyze: The requirements

1. Compute the variable overhead cost and efficiency variances and fixed overhead cost and volume variances.

2. EXPLAIN (as best you can) why the variances are favorable or unfavorable. Based on cost and efficiency budget standards.