SHOW FORMULAS: ABBREVIATIONS USED: AC=ACTUAL COST, AQ=ACTUAL QUANTITY, FOH = FIXED OVERHEAD; SC = STANDARD COST; SQ=STANDARD QUANITY; VOH= VARIABLE OVERHEAD.

Quality, Inc. uses a standard cost system and provides the following information:

Static budget variable overhead	$2,200
Static budget fixed overhead	$3,300
Static budget direct labor hours	1,100	hours
Static budget number of units	550	units
Standard direct labor hours	2	hours per unit

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; $3,800; actual fixed overhead, $3,400; actual direct labor hours, 1,400.

Requirements:

1.	Compute the variable overhead cost and efficiency variances and fixed overhead cost and volume variances.
2.	Explain why the variances are favorable or unfavorable.