Refer to the Smithson, Inc. data in Short Exercise S23-9. Last month, Smithson reported the following actual results: actual variable overhead, $10,400; actual fixed overhead, $2,750; actual production of 5,000 units at 0.30 direct labor hours per unit.
The standard direct labor time is 0.25 direct labor hours per unit (1,200 static direct labor hours / 4,800 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.