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 20,000 Standard direct labor hours Budgeted overhead Variable overhead costs Indirect materials $12,000 Indirect labor 20,000 Power 5,000 Maintenance 3,000 Total variable costs 40,000 Fixed overhead costs Rent of factory building Depreciation-Machinery Supervisory salaries Total fixed costs 19,000 10,400 14,600 44,000 Total overhead costs $84,000 During May, the company operated at 90% capacity (11,250 units) and incurred the following actual overhead costs: Overhead Costs Indirect materials $12,000 22,200 5,625 3,990 19,000 Indirect labor Power Maintenance Rent of factory building Depreciation-Machinery Supervisory salaries 10,400 17,600 $90,815 Total 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 11,250 units. Required 1 Required 2 Required 3 Compute the overhead controllable variance. Classify as favorable or unfavorable. Controllable variance Total actual overhead Flexible budget overhead Total Overhead controllable variance