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

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

1. Compute the overhead controllable variance. 2. Compute the overhead volume variance. 3. Prepare an overhead variance report at the actual activity level of 9,000 units.

Operating Levels 80% 10,000 30,000 Overhead Budget Production in units Standard direct labor hours Budgeted overhead Variable overhead costs Indirect materials Indirect labor Power Maintenance Total variable costs Fixed overhead costs Rent of factory building Depreciation-Machinery Taxes and insurance Supervisory salaries Total fixed costs $13,200 16,600 7,000 5,200 42,000 16,000 25,000 2,300 13,700 57,000 $99,000 Total overhead costs Overhead costs (actual) Indirect materials Indirect labor Power Maintenance Rent of factory building Depreciation-Machinery Taxes and insurance Supervisory salaries Total actual overhead costs $ 13,200 16,600 7,875 6,800 16,000 19,550 3,100 20,300 $103,425 Controllable Variance Total actual overhead Flexible budget overhead Total Overhead controllable variance Volume Variance Volume variance BLAZE CORP. Overhead Variance Report For Month Ended March 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