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 80% Overhead Budget Production in units Standard direct labor hours Budgeted overhead 10,000 20,000 Variable overhead costs Indirect materials Indirect labor Power Maintenance Total variable costs $12,000 20,000 5,000 3,000 40,000 Fixed overheadcosts Rent of factory building Depreciation-Machinery Supervisory salaries Total fixed costs 19,000 10,400 14,600 44,000 $84,000 Total overhead costs During May, the company operated at 90% capacity (11,250 units) and incurred the following actual overhead costs: Overhead Costs Indirect materials Indirect labor Power Maintenance Rent of factory building Depreciation-Machinery Supervisory salaries $12,000 22,200 5,625 3,990 19,000 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