James Corp. applies overhead on the basis of direct labor hours. For the month of May, the company planned production of 9,600 units (80% of its production capacity of 12,000 units) and prepared the following overhead budget:

	Operating Levels
Overhead Budget	80%
Production in units		9,600
Standard direct labor hours		24,000
Budgeted overhead
Variable overhead costs
Indirect materials	$	18,000
Indirect labor		24,000
Power		5,400
Maintenance		3,000
Total variable costs		50,400
Fixed overhead costs
Rent of factory building		20,000
Depreciationmachinery		10,500
Supervisory salaries		16,300
Total fixed costs		46,800
Total overhead costs	$	97,200

During May, the company operated at 90% capacity (10,800 units) and incurred the following actual overhead costs:

Overhead Costs
Indirect materials	$	18,000
Indirect labor		26,650
Power		6,075
Maintenance		3,995
Rent of factory building		20,000
Depreciationmachinery		10,500
Supervisory salaries		19,400
Total actual overhead costs	$	104,620
1.Compute the overhead controllable variance. Prepare an overhead variance report at the actual activity level of 10,800 units.	2