Jensen Supply Company normally operates at 450,000 direct labor hours a year. At this level of operation, variable overhead has been budgeted at $337,500, and fixed overhead has been budgeted at $1,012,500.

Required:
1. Compute the total factory overhead rate per direct labor hour at normal volume.
2. Determine the variable portion of the overhead rate at normal volume. What would be the variable overhead rate if normal volume were 400,000 direct labor hours instead of 450,000 hours? Assume that variable cost changes in direct proportion with hours of operation.
3. Determine the fixed portion of the overhead rate at normal volume. What would be the fixed overhead rate if 400,000 direct labor hours were considered normal volume? Explain why the rate differs depending on the level set as normal volume.