Reference no: EM132969938

Question - Best?, Inc. uses a standard cost system and provides the following information.

Static budget variable overhead $ 2,300

Static budget fixed overhead $ 3,450

Static budget direct labor hours 1,150 hours

Static budget number of units 575 units

Standard direct labor hours 2 hours per unit

Best allocates manufacturing overhead to production based on standard direct labor hours. Best reported the following actual results for 2024?: actual number of units? produced, 1,000?; actual variable? overhead, $5,000?; actual fixed? overhead, $3,500?; actual direct labor? hours, 1,900.

Requirements -

1. Compute the variable overhead cost and efficiency variances and fixed overhead cost and volume variances.

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? = standard? quantity; VOH? = variable? overhead.)

2. Explain why the variances are favorable or unfavorable.