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The following information relates to Watson, Inc.'s overhead costs for the month: (Click the icon to view the information.) 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. Requirement 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. Begin by selecting the formulas needed to compute the variable overhead (VOH) and fixed overhead (FOH) variances, and then compute each variance amount = VOH cost variance = VOH efficiency variance - FOH cost variance = FOH volume variance Requirement 2. Explain why the variances are favorable or unfavorable. The variable overhead cost variance is because Watson actually spent than budgeted. = The variable overhead efficiency variance is because the actual hours used was than budgeted. because Watson actually spent than budgeted for fixed overhead. The fixed overhead cost variance is The fixed overhead volume variance is because Watson allocated overhead to jobs than the budgeted fixed overhead amount.

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