Blaze Corp. applies overhead on the basis of direct labor hours. For the month of March, the company planned production of 8,000 units (80% of its production capacity of 10,000 units) and prepared the following budget:

	Operating Levels
Overhead Budget	80%
Production in units		8,000
Standard direct labor hours		32,000
Budgeted overhead
Variable overhead costs
Indirect materials	$	10,000
Indirect labor		16,000
Power		4,000
Maintenance		2,000
Total variable costs		32,000
Fixed overhead costs
Rent of factory building		12,000
DepreciationMachinery		20,000
Taxes and insurance		2,400
Supervisory salaries		13,600
Total fixed costs		48,000
Total overhead costs	$	80,000

During March, the company operated at 90% capacity (9,000 units), and it incurred the following actual overhead costs.

Overhead Costs
Indirect materials	$	10,000
Indirect labor		16,000
Power		4,500
Maintenance		3,000
Rent of factory building		12,000
DepreciationMachinery		19,200
Taxes and insurance		3,000
Supervisory salaries		14,000
Total actual overhead costs	$	81,700

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.

(Not 800)

Required 1 Required 2 Required 3 Prepare an overhead variance report at the actual activity level of 9,000 units. Classify as favorable or unfavorable BLAZE CORP Overhead Variance Report For Month Ended March 31 Expected production volume Production level achieved Volume variance 80% of capacity 90% of capacity 6,000 Favorable Controllable Variance Flexible Budget Actual Results Variances Fav./ Unfav Variable overhead costs 1,250 Favorable 2,000 Favorable Indirect materials Indirect labor Power Maintenance 11,250 18,000 4,500 2,250 10,000 16,000 4,500 3,000 o variance 750 Unfavorable 36,000 33,500 2,500 Favorable Fixed overhead costs Rent of factory building Depreciation-Machinery Taxes and insuran Supervisory salaries 12,000 20,000 2,400 13,600 12,000 19,200 3,000 14,000 U[No variance Favorable ce nfavorable 400 Unfavorable 200 Unfavorable 48,000 84,000 $ 48,200 Total overhead costs 81,700 $ 2,300 Favorable KRequired 2 Required 3