Quality allocates manufacturing overhead to production based on standard direct labor hours. Quality reported the following actual results for 2018: actual number of units produced, 1,000; actual variable overhead, $5,000; actual fixed overhead, $2,900; actual direct labor hours, 1,400 Read the requirements. Requirement 1. Compute the variable overhead cost and efficiency variances and fixed overhead cost and volume variances. Begin with the variable overhead cost and efficiency variances. Select the required formulas, compute the variable overhead cost and efficiency variances, and identify whether each variance is favorable (F) or unfavorable (U). (Abbreviations used: AC = actual cost; AQ = actual quantity; FOH = fixed overhead; SC = standard cost; SQ = standard quantity; VOH = variable overhead - X Formula Variance i Data Table VOH cost variance (AC - SC) X AQ $ 2,900 U VOH efficiency variance (AQ - SQ) x SC $ 900 F Static budget variable overhead $ 1,200 Now compute the fixed overhead cost and volume variances. Select the required formulas, compute the fixed overhead c AQ = actual quantity; FOH = fixed overhead; SC = standard cost; SQ = standard quantity.) Static budget fixed overhead $ 1,600 ) or unfavorable (U). (Abbreviations used: AC = actual cost; 800 hours Formula Variance Static budget direct labor hours 400 units FOH cost varian Actual FOH - Budgeted FOH $ 1,300 U Static budget number of units FOH volume variance 2,400 F Standard direct labor hours 2 hours per unit Bugeted FOH - Allocated FOH $ Requirement 2. Explain why the variances are favorable or unfavorable. Print Done The variable overhead cost variance is unfavorable because the actual cost per direct labor hour was more than the