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	80%
Production in units		8,000
Standard direct labor hours		30,000
Budgeted overhead
Variable overhead costs
Indirect materials	$	21,000
Indirect labor		30,000
Power		7,200
Maintenance		4,800
Total variable costs		63,000
Fixed overhead costs
Rent of factory building		17,000
DepreciationMachinery		11,400
Supervisory salaries		25,600
Total fixed costs		54,000
Total overhead costs	$	117,000

During May, the company operated at 90% capacity (9,000 units) and incurred the following actual overhead costs:

Overhead Costs
Indirect materials	$	21,000
Indirect labor		33,550
Power		8,100
Maintenance		6,210
Rent of factory building		17,000
DepreciationMachinery		11,400
Supervisory salaries		28,500
Total actual overhead costs	$	125,760

1. Compute the overhead controllable variance. 2. Compute the overhead volume variance. 3. Prepare an overhead variance report at the actual activity level of 9,000 units.