Lancaster Ltd. produces a unique item. Lancaster's management team wishes to preform a variance analysis on its fixed overhead. Fixed overhead is applied to units produced using direct labor hours as its cost driver. The company's managerial accountant has compiled the following information:

Projected data:

Estimated direct labor hours 40,000 hours

Estimated fixed overhead $90,000

Actual data:

Actual production 300,000 units

Actual direct labor hours used 50,000 hours

Actual fixed overhead $100,000

Required:

A. Compute the fixed overhead spending variance and identify if the variance is favorable or unfavorable.

B.Compute the fixed overhead volume variance and identify if the variance is favorable or unfavorable.