The following information relates to Watson, Inc.'s overhead costs for the month: (Click the icon to view the information.) 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. Data Table thead cost variance, overhead volume H) and fixed Static budget variable overhead $ 7,500 $ 3,000 Static budget fixed overhead fost variance Static budget direct labor hours 1,500 hours efficiency variance Static budget number of units 7,500 units fost variance Volume variance Watson allocates manufacturing overhead to production based on standard direct labor hours. Last month, Watson reported the following actual results: actual variable overhead, $10,600; actual fixed overhead, $2,770; actual production of 7,000 units at 0.40 direct labor hours per unit. The standard direct labor time is 0.2 direct labor hours per unit (1,500 static direct labor hours / 7,500 static units). tinue to the next ? Print Done 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 J = VOH efficiency variance = FOH cost variance = FOH volume variance Requirement 2. Explain why the variances are favorable or unfavorable. The variable overhead cost variance is because Watson actually spent than budgeted. The variable overhead efficiency variance is because the actual hours used was v than budgeted. The fixed overhead cost variance is ause Watson actually spent than budgeted for fixed overhead. The fixed overhead volume variance is because Watson allocated overhead to jobs than the budgeted fixed overhead amount