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: Overhead Budget Production in units Standard direct labor hours Budgeted overhead Variable overhead costs Indirect materials Indirect labor Power Maintenance Operating Levels 80% 10,000 36,000 $ 21,600 36,000 7,200 3,600 Total variable costs 68,400 Fixed overhead costs Rent of factory building 20,000 Depreciation-Machinery 11,700 Supervisory salaries 29,500 61,200 $129,600 Total fixed costs Total overhead costs During May, the company operated at 90% capacity (11,250 units) and incurred the following actual overhead costs: Overhead costs (actual) Indirect materials Indirect labor Maintenance $ 21,600 40,150 Power 8,100 4,875 Rent of factory building 20,000 11,700 32,700 $139,125 Depreciation-Machinery Supervisory salaries Total actual overhead costs 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 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 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 >