Refer to the Morgan, Inc. data in Short Exercise S23-9. Last month, Morgan reported the following actual results: actual variable overhead, $10,800; actual fixed overhead, $2,770; actual production of 7,000 units at 0.20 direct labor hours per unit. The standard direct labor time is 0.25 direct labor hours per unit (1,300 static direct labor hours / 5,200 static units).
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.
Refer in Short Exercise S23-9,
The following information relates to Morgan, Inc.'s overhead costs for the month:
Static budget variable overhead .................... $7,800
Static budget fixed overhead ....................... $3,900
Static budget direct labor hours .............. 1,300 hours
Static budget number of units ................ 5,200 units
Morgan allocates manufacturing overhead to production based on standard direct labor hours. Compute the standard variable overhead allocation rate and the standard fixed overhead allocation rate?