Good Deal, Inc. is a competitor of Bargain, Inc. from Exercise E23-18. Good Deal also uses a standard cost system and provides the following information:
Static budget variable overhead.........$ 1,200
Static budget fixed overhead..........$ 1,600
Static budget direct labor hours........800 hours
Static budget number of units ........400 units
Standard direct labor hours........2 hours per unit
Good Deal allocates manufacturing overhead to production based on standard direct labor hours. Good Deal reported the following actual results for 2016: actual number of units produced, 1,000; actual variable overhead, $2,400; actual fixed overhead, $2,900; actual direct labor hours, 1,300.
1. Compute the variable overhead cost and efficiency variances and fixed overhead cost and volume variances.
2. Explain why the variances are favorable or unfavorable.