Premium allocates manufacturing overhead to production based on standard direct labor hours. Premium...

Consider the following additional information:

Static budget variable overhead	$1,600
Static budget fixed overhead	$3,200
Static budget direct labor hours	1,600 hours
Static budget number of units	800

Premium allocates manufacturing overhead to production based on standard direct labor hours. Premium reported the following actual results for 2012: actual variable overhead, $1,900; actual fixed overhead, $3,300.

Requirements

1. Compute the variable and fixed overhead variances.

2. Explain why the variances are favorable or unfavorable.