Levelor Company's flexible budget shows $10, 610 of overhead at 75% of capacity, which was the operating level achieved during May. However, the company applied overhead to production during May at a rate of $2.20 per direct labor hour based on a budgeted operating level of 6, 020 direct labor hours (90% of capacity). If overhead actually incurred was $11, 073 during May, the controllable variance for the month was: $463 unfavorable. $463 favorable. $2, 634 favorable. $2, 634 unfavorable. $2, 171 favorable. Chang Industries has 1, 100 defective units of product that have already cost $13, 10 each to produce. A salvage company will purchase the defective units as they are for $4, 10 each. Chang's production manager reports that the defects can be corrected for $6.90 per unit, enabling them to be sold at their regular market price of $19.20. The incremental income or loss on reworking the units is: $9, 020 loss. $9, 020 income. $7, 590 loss. $16, 610 income. $13, 530 income