Begum Company has developed the following standard overhead costs based on a capacity of 400,000 direct labour-hours:

Variable overhead costs (2 hours at $4)..........................................$ 8
Fixed overhead costs (2 hours at $5)................................................10
.............................................................................................................$18

During May, 170,000 units were scheduled for production; however, only 160,000 units were actually produced. The following information relates to May’s production:

a. Actual direct labour cost incurred was $1,288,000 for 330,000 actual hours of work.

b. Actual overhead costs incurred totalled $2,956,000 ($1,236,000 variable and $1,720,000 fixed).

c. All inventories are carried at standard cost.

Required:

1. Compute the variable overhead variances for May.

2. Compute the fixed overhead variances for May.

3. Explain the variable overhead efficiency and production volume variances.