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29) James Corp. applies overhead on the basis of direct labor hours. For the month of May, the company planned production of 10,000 units (80%

29)

James Corp. applies overhead on the basis of direct labor hours. For the month of May, the company planned production of 10,000 units (80% of its production capacity of 12,500 units) and prepared the following overhead budget:

Operating Levels
Overhead Budget 80%
Production in units 10,000
Standard direct labor hours 25,000
Budgeted overhead
Variable overhead costs
Indirect materials $ 15,000
Indirect labor 25,000
Power 7,000
Maintenance 3,000
Total variable costs 50,000
Fixed overhead costs
Rent of factory building 25,000
Depreciationmachinery 11,000
Supervisory salaries 14,000
Total fixed costs 50,000
Total overhead costs $ 100,000

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

Overhead Costs
Indirect materials $ 15,000
Indirect labor 27,725
Power 7,875
Maintenance 4,020
Rent of factory building 25,000
Depreciationmachinery 11,000
Supervisory salaries 17,600
Total actual overhead costs $ 108,220

1. Compute the overhead controllable variance.

2. Compute the overhead volume variance.(Do not round intermediate calculations.)

3.

Prepare an overhead variance report at the actual activity level of 11,250 units.

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