The following information relates to Johnson, Inc.'s overhead costs for the month:

Requirement 2. Explain why the variances are favorable or unfavorable.

The variable overhead cost variance is (favorable or unfavorable) because Watson actually spent (more or less) than budgeted.

The variable overhead efficiency variance (favorable or unfavorable) because the actual hours used was (more or less) than budgeted.

The fixed overhead cost variance is (favorable or unfavorable) beause Johnson actually spent (more or less) than budgeted for fixed overhead.

The fixed overhead volume variance is (favorable or unfavorable) because Johnson allocated (more or less) overhead to jobs than the budgeted fixed overhead amount.

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 Johnson allocates manufacturing overhead to production based on standard direct labor hours. Last month, Johnson reported the following actual results: actual variable overhead, $10,000; actual fixed overhead, $2,790; actual production of 6,800 units at 0.40 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). 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) * 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