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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
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:
|
Overhead Costs | ||
Indirect materials | $ | 15,000 |
Indirect labor | 26,500 | |
Power | 6,750 | |
Maintenance | 4,000 | |
Rent of factory building | 15,000 | |
Depreciationmachinery | 10,000 | |
Supervisory salaries | 22,000 | |
Total actual overhead costs | $ | 99,250 |
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. |
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