Gerhan Company's flexible budget for the units manufactured in May shows $15,720 of total factory overhead; this output level represents 70% of available capacity. During May, the company applied overhead to production at the rate of $3.00 per direct labor hour (DLH), based on a denominator volume level of 5,850 DLHs, which represents 90% of available capacity. The company used 5,000 DLHs and incurred $16,000 of total factory overhead cost during May, including $9,900 for fixed factory overhead. What is the factory overhead efficiency variance (to the nearest whole dollar) for May under the assumption that Gerhan uses a four-variance breakdown (decomposition) of the total overhead variance? (Round your intermediate calculation to 2 decimal places.)

Multiple Choice

• $335 unfavorable.

• $535 favorable.

• $535 unfavorable.

• $635 unfavorable.

• $635 favorable.