1. Compute the overhead variances for the year: 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.

All Star Fender is a competitor of Superior Fender. All Star Fender also uses a standard cost system and provide the following information: EB (Click the icon to view the information.) All Star Fender allocates manufacturing overhead to production based on standard direct labor hours. All Star Fender reported the following actual results for 2016: actual number of fenders produced, 20,000; actual variable overhead. $4.420: actual fixed overhead, $34,000: actual direct labor hours, 420. Read the requirements. Requirement 1. 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 variances, and identify whether each variance is favorable (F) or unfavorable (U). (Abbreviations used: AC actual cost; AQ actual quantity; FOH fixed overhead; SC standard cost; SQ d i Formula Variance Data Table VOH cost variance VOH efficiency variance Static budget variable overhead 1,566 S 31,320 Static budget fixed overhead Static budget direct labor hours 783 hours 29,000 units Static budget number of units 0.027 hours per fender Standard direct labor hours Choose from any list or enter any number in the input fields and then click Check