James Corp. applies overhead on the basis of direct labor hours. For the month of May, the company planned production of 8,000 units (80% of its production capacity of 10,000 units) and prepared the following overhead budget: Operating Levels Overhead Budget Production in units 80% 8,000 Standard direct labor hours 22,000 Budgeted overhead Variable overhead costs Indirect materials Indirect labor Power $13,200 22,000 8,800 Maintenance 4,400 Total variable costs 48,400 Fixed overhead costs Rent of factory building 18,000 Depreciation-Machinery 10,300 Supervisory salaries 17,900 Total fixed costs 46,200 Total overhead costs $94,600 During May, the company operated at 90% capacity (9,000 units) and incurred the following actual overhead costs: Overhead costs (actual) Indirect materials Indirect labor Power Maintenance Rent of factory building Depreciation-Machinery Supervisory salaries Total actual overhead costs $ 13,200 24,500 9,900 5,560 18,000 10,300 20,800 $102,260 1. Compute the overhead controllable variance and classify it as favorable or unfavorable. 2. Compute the overhead volume variance and classify it as favorable or unfavorable. 3. Prepare an overhead variance report at the actual activity level of 9,000 units. Required 1 Required 2 Required 3 Compute the overhead controllable variance and classify it as favorable or unfavorable. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance.) Total actual overhead Flexible budget overhead Total Overhead controllable variance Controllable variance Required 1 Required 2 Required 3 Compute the overhead volume variance and classify it as favorable or unfavorable. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance. Do not round intermediate calculations.) Volume variance Volume Variance Prepare an overhead variance report at the actual activity level of 9,000 units. Classify as favorable or unfavorable. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance. Do not round intermediate calculations.) Expected production volume Production level achieved Volume variance Controllable Variance JAMES CORP. Overhead Variance Report For Month Ended May 31 Flexible Budget Actual Results Variances Fav./Unfav. Variable overhead costs: Fixed overhead costs: Total overhead costs