#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		28,000
Budgeted overhead
Variable overhead costs
Indirect materials	$	15,400
Indirect labor		28,000
Power		7,000
Maintenance		5,600
Total variable costs		56,000
Fixed overhead costs
Rent of factory building		24,000
Depreciationmachinery		10,900
Supervisory salaries		15,500
Total fixed costs		50,400
Total overhead costs	$	106,400

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

Overhead Costs

Indirect materials

$

15,400

Indirect labor

30,950

Power

7,875

Maintenance

6,940

Rent of factory building

24,000

Depreciationmachinery

10,900

Supervisory salaries

19,000

Total actual overhead costs

$

115,065

1.	Compute the overhead controllable variance.

Total actual overhead
Flexible budget overhead
Total		0
Overhead controllable variance

2.

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

Volume Variance
Volume variance

3.

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

JAMES CORP.

Overhead Variance Report

For Month Ended May 31

Expected production volume

Production level achieved

Volume variance

Controllable Variance

Flexible Budget

Actual Results

Variances

Fav./Unfav.

Variable overhead costs:

Fixed overhead costs:

Total overhead costs

Please and thank you :)