For May, Mariana company planned production of 10,000 units (80% of its production capacity of 12,500 units) and prepared the following overhead budget. The company applies overhead with a standard of 2 DLH per unit and a standard overhead rate of $4 per DLH.

Overhead Budget	80% Operating Level
Production (in units)	10,000
Budgeted overhead
Variable overhead costs
Indirect materials	$ 15,000
Indirect labor	20,000
Power	5,000
Maintenance	2,000
Total variable overhead costs	42,000
Fixed overhead costs
Rent of building	15,000
DepreciationMachinery	11,200
Supervisory salaries	9,800
Total fixed overhead costs	36,000
Total overhead	$ 78,000

It actually operated at 90% capacity (11,250 units) in May and incurred the following actual overhead.

Actual Overhead Costs
Indirect materials	$ 15,000
Indirect labor	22,400
Power	5,625
Maintenance	3,050
Rent of building	15,000
DepreciationMachinery	11,200
Supervisory salaries	12,500
Actual total overhead	$ 84,775

1. Compute the overhead controllable variance and identify it as favorable or unfavorable. 2. Compute the overhead volume variance and identify it as favorable or unfavorable. 3. Prepare an overhead variance report at the actual activity level of 11,250 units.

Complete this question by entering your answers in the tabs below.

• Required 1
• Required 2
• Required 3

Compute the overhead controllable variance and identify it as favorable or unfavorable. (Indicate the effect of the variance by selecting favorable, unfavorable, or no variance.)

Controllable variance
Actual total overhead		$84,775selected answer correct
Budgeted (flexible) overhead
Variable overheadselected answer correct	$47,250selected answer correct
Fixed overheadselected answer correct	36,000selected answer correct	83,250
Controllable variance		$1,525selected answer correct	Unfavorableselected answer correct

Compute the overhead volume variance and identify it as favorable or unfavorable. (Indicate the effect of the variance by selecting favorable, unfavorable, or no variance. Do not round intermediate calculations.)

Volume Variance
Budgeted (flexible) overheadselected answer correct	$83,250selected answer correct
Standard overhead appliedselected answer correct	40,500selected answer incorrect
Volume variance	$42,750selected answer incorrect	Favorableselected answer correct

Prepare an overhead variance report at the actual activity level of 11,250 units. (Indicate the effect of each variance by selecting favorable, unfavorable, or no variance. Do not round intermediate calculations.)

MARIANA COMPANY

Overhead Variance Report

For Month Ended May 31

Expected

80% of capacityselected answer correct

Actual

90% of capacityselected answer correct

Volume variance

$42,750selected answer incorrect

Favorableselected answer correct

Controllable Variance

Flexible Budget

Actual Results

Variances

Favorable/Unfavorable

Variable overhead costs:

Indirect materialsselected answer correct

$16,875selected answer correct

$15,000selected answer correct

$1,875selected answer correct

Favorableselected answer correct

Indirect laborselected answer correct

22,500selected answer correct

22,400selected answer correct

100selected answer correct

Favorableselected answer correct

Powerselected answer correct

5,625selected answer correct

5,625selected answer correct

0selected answer correct

No varianceselected answer correct

Maintenanceselected answer correct

2,250selected answer correct

3,050selected answer correct

800selected answer correct

Unfavorableselected answer correct

not attempted

not attempted

not attempted

not attempted

not attempted

Total variable overhead costsselected answer correct

47,250

46,075

1,175selected answer correct

Favorableselected answer correct

Fixed overhead costs:

Rent of buildingselected answer correct

15,000selected answer correct

15,000selected answer correct

0selected answer correct

No varianceselected answer correct

DepreciationMachineryselected answer correct

11,200selected answer correct

11,200selected answer correct

0selected answer correct

No varianceselected answer correct

Supervisory salariesselected answer correct

9,800selected answer correct

12,500selected answer correct

2,700selected answer correct

Unfavorableselected answer correct

not attempted

not attempted

not attempted

not attempted

not attempted

Total fixed overhead costsselected answer correct

36,000

38,700

2,700selected answer correct

Unfavorableselected answer correct

Total overhead costs

$83,250

$84,775

$1,525selected answer correct

Unfavorableselected answer correct

Volume Variance

Budgeted (flexible) overheadselected answer correct

83,250selected answer correct

Standard overhead appliedselected answer correct

40,500selected answer incorrect

Volume variance

$42,750selected answer incorrect

Favorableselected answer correct

Total overhead variance

not attempted

Favorableselected answer correct

**** Having trouble figuring out the Standard overhead applied amount and volume variance for required two.

***** Having trouble figuring out bottom portion of required three for standard overhead applied, volume variance, and total variance.