Grand Fender is a competitor of Pro Fender from Exercise E23-19. Grand Fender also uses a standard cost system and provides the following information:

Static budget variable overhead $ 5,630

Static budget fixed overhead $ 22,520

Static budget direct labor hours 563 hours

Static budget number of units 21,000 units

Standard direct labor hours 0.026 hours per fender

Grand Fender allocates manufacturing overhead to production based on standard direct labor hours. Grand Fender reported the following actual results for 2016: actual number of fenders produced, 20,000; actual variable overhead, $5,200; actual fixed overhead, $24,000; actual direct labor hours, 480.

Requirements

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.