Requirements

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.

E23-21 Calculating overhead variances Mills, Inc. is a competitor of Murry, Inc. from Exercise E23-18. Mills 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 Static budget number of units Standard direct labor hours 800 hours 400 units 2 hours per unit Mills allocates manufacturing overhcad to production based on standard dircct labor hours. Mills reported the following actual results for 2018: actual number of units produced, 1,000 actual variable overhead, $4,000; actual fixed overhcad, $3,100; actual direct labor hours, 1,600