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

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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.

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.

VOH cost variance $=$

VOH efficiency variance $=$

FOH cost variance $=$

FOH volume variance $=$

VOH cost variance $=$

VOH efficiency variance $=$

FOH cost variance $=$

$OH$ volume variance $=$

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Data

$\backslash$table$[[$Static budget variable overhead,$$,6,000],[$Static budget fixed overhead,$$,3,000],[$Static budget direct labor hours,$1,500$ hours,$],[$Static budget number of units,$3,000$ units,$]]$

Watson, Inc.allocates manufacturing overhead to production based on standard direct labor hours, Last month, Watson, Inc.reported the following actual results: actual variable overhead, $$11,000$ actual fixed overhead, $$2,750$ actual production of $7,200$units at $0\mathrm{.}4$ direct labor hours per unit. The standard direct labor time is $0\mathrm{.}5$ direct labor hours per unit $(1,500$ static direct labor hours $+3,000$ static units$).$