21 A company's total overhead rate of $3.80 per direct labor hour (DLH) is based on a predicted activity level of 3,965 units (65% of capacity). The standards for producing one unit are: Variable overhead, 20 hours @ $2.60 per DLH; and Fixed overhead, 20 hours @ $1.20 per DLH. During the current period, the company operated at 60% capacity, and incurred actual variable overhead costs of $185,290 and actual fixed overhead costs of $100,400. Flexible overhead budget information follows. Operating Levels (% of 01:59:07 Budgeted production (units) capacity) Flexible Overhead Budget Budgeted direct labor (standard hours) 60% 3,660 73,200 65% 3,965 79,300 $ 190,320 95,160 $ 206,180 95,160 $ 285,480 $ 301,340 Budgeted overhead costs Variable overhead Fixed overhead Total overhead 1. Compute the total fixed overhead variance. Indicate whether it is favorable or unfavorable. 2. Compute the total variable overhead variance. Indicate whether it is favorable or unfavorable. Note: Indicate the effect of each variance by selecting favorable, unfavorable, or no variance. Overhead Variances at 60% of Operating Capacity Fixed overhead variance Variable overhead variance Overhead Rate per DLH Standard Direct Labor Hours Standard Overhead Applied Actual Overhead Overhead Variance Favorable or Unfavorable