The following information relates to Johnson, Inc.$\text{'}$s overhead costs for the month:

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Requirements

$2.$ Explain why the variances are favorable or unfavorable. 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$)$ Actual hours $=$ VOH cost variance $=$

$($Actual hours $-$ Standard hours allowed$)$ Standard cost $=$ VOH efficiency variance $=$

Actual overhead $-$ Budgeted overhead $=$ FOH cost variance $=$

Budgeted overhead $-$ Allocated overhead $=$ FOH volume variance $=$

Data table

$\backslash$table$[[$Static budget variable overhead,$$,7,200],[$Static budget fixed overhead,$$,3,600],[$Static budget direct labor hours,$1,200$ hours,$],[$Static budget number of units,$2,400$ units,$]]$

Johnson allocates manufacturing overhead to production based on standard direct labor hours. Last month, Johnson reported the following actual results: actual variable overhead, $$10,200$; actual fixed overhead, $$2,770$; actual production of $7,000$ units at $0\mathrm{.}30$ direct labor hours per unit. The standard direct labor time is $0\mathrm{.}5$ direct labor hours per unit $(1,200$ static direct labor hours $/2,400$ static units$).$