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

$($Click the icon to view the information.$)$

Requirements

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

Explain why the variances are favorable or unfavorable.

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 $=$

$($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

Morgan allocates manufacturing overhead to production based on

standard direct labor hours. 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$).$