Chapter 23, Problem E23.20E

Computing overhead variances Learning Objective 4

1. FOH VoL Var. $3,000 U Mason Fender is a competitor of Matthews Fender from Exercise E23-19. Mason Fender also uses a standard cost system and provides the following information:

Static budget variable overhead	$ 2,300
Static budget fixed overhead	$23,000
Static budget direct labor hours	575 hours
Static budget number of units	23,000 units
Standard direct labor hours	0,025 hours per fender

Mason Fender allocates manufacturing overhead to production based on standard direct labor hours. Mason Fender reported the following actual results for 2018: actual number of fenders produced, 20,000: actual variable overhead, $5,350: actual fixed overhead, $26,000: actual direct labor hours, 460

Requirements
1. Compute the overhead variances for the year 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,