Refer to the Morgan, Inc $($Static budget variable overhead: $$7,800.$ Static budget fixed overhead: $$3,900.$ Static budget direct labor hours: $1,300$ hours. Static budget number of units: $5,200$ units.$)$

$.$ Last month, Morgan reported the following actual results: actual variable overhead, $$10,800$; actual fixed overhead, $$2,770$; actual production of $7,000$ units at $0\mathrm{.}20$ direct labor hours per unit.

The standard direct labor time is $0\mathrm{.}25$ direct labor hours per unit $(1,300$ static direct labor hours $/5,200$ static units$).$

Requirements

$1.$ Compute the overhead variances for variable overhead cost variance and variable overhead efficiency. Variable overhead rate is $$6$ per direct labor hour. Explain why the variances are favorable or unfavorable