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

Goldman allocates manufacturing overhead to production based on standard direct labor hours. Last month,

Goldman reported the following actual results: actual variable overhead,

$ 10,200 actual fixedoverhead, $ 2, 830 actual production of 7,100 units at

0.20 direct labor hours per unit. The standard direct labor time is 0.25

direct labor hours per unit (1,300 static direct labor hours/5,200 static units).

Requirements

1.	Compute the overhead variances for the month: variable overhead cost variance, variable overhead efficiency variance, fixed overhead cost variance, and fixed overhead volume variance.
2.	Explain why the variances are favorable or unfavorable.

Requirement 1. Compute the overhead variances for the month: variable overhead cost variance, variable overhead efficiency variance, fixed overhead cost variance, and fixed overhead volume variance.

Begin by selecting the formulas needed to compute the variable overhead (VOH) and fixed overhead (FOH) variances, and then compute each variance amount.

(Actual cost - Standard cost) x Actual hours	=	VOH cost variance
(Actual hours - Standard hours allowed) x Standard cost	=	VOH efficiency variance
Actual overhead - Budgeted overhead	=	FOH cost variance
Budgeted overhead - Allocated overhead	=	FOH volume variance

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