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 Standard direct labor hours 30,000 Budgeted overhead Variable overhead costs Indirect materials $ 21,000 Indirect labor 30,000 Power 6,000 Maintenance 3,000 Total variable costs 60,000 Fixed overhead costs Rent of factory building 14,000 Depreciation?Machinery 11,100 Supervisory salaries 28,900 Total fixed costs 54,000 Total overhead costs $ 114,000

During May, the company operated at 90% capacity (11,250 units) and incurred the following actual overhead costs:

Overhead costs (actual) Indirect materials $ 21,000 Indirect labor 33,300 Power 6,750 Maintenance 4,025 Rent of factory building 14,000 Depreciation?Machinery 11,100 Supervisory salaries 32,600 Total actual overhead costs $ 122,775

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. n overhead variance report at the actual activity level of 11,250 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 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. [)0 not round Intermediate calculations.) Volume van'ance Required 1 Required 2 Required 3 ' Prepare an overhead variance report at the actual activity level of 11,250 units. Classify as favorable o'r 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 Variable overhead c0515: Total overhead costs