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solveBest Fender is a competitor of Great Fender. Best Fender also uses a standard cost system and provide the following information:

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

fixed overhead, $$34,000$; actual direct labor hours, $460.$

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Requirements

Requirement $1.$ Compute the overhead variances for the year: variable overhead cost variance, variable overhead efficiency variance, fixed overhead

Compute the overhead variances for the year: variable overhead

cost variance, variable overhead efficiency variance, fixed overhead

cost variance, and fixed overhead volume variance.

Begin with the variable overhead cost and efficiency variances. Select the required formulas, compute the variable overhead cost and efficiency varian

Explain why the variances are favorable or unfavorable.

used: $AC=$ actual cost; $AQ=$ actual quantity; FOH $=$ fixed overhead; $SC=$ standard cost; $SQ=$ standard quantity; VOH$=$ variable overhead.$)$

Now compute the fixed overhead cost and volume variances. Select the required formulas, compute the fixed overhead cost and volume variances, an $($

actual cost; $AQ=$ actual quantity; FOH$=$ fixed overhead; $SC=$ standard cost; $SQ=$ standard quantity. $)$

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

The variable overhead cost variance is

$\text{'}$ because management spent more' than budgeted for the actual production.

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