12.

During May, the company operated at 90% capacity (11,250 units) and incurred the following actual overhead costs:

Overhead costs (actual)
Indirect materials	$	15,000
Indirect labor		33,400
Power		8,100
Maintenance		6,245
Rent of factory building		15,000
DepreciationMachinery		12,100
Supervisory salaries		27,500
Total actual overhead costs	$	117,345

1. Compute the overhead controllable variance and classify it as favorable or unfavorable. 2. Compute the overhead volume variance and classify it as favorable or unfavorable. 3. Prepare an overhead variance report at the actual activity level of 11,250 units.

Controllable variance
Total actual overhead		$117,345
Flexible budget overhead
Variable
Fixed
Total		0
Overhead controllable variance			Unfavorable

Volume Variance
Total budgeted fixed OH
Total fixed overhead applied
Volume variance