Overhead Variance Report

Prepare an overhead variance report at the actual activity level of 11,250 units. (Indicate the effect of each variance by selecting favorable, unfavorable, or no variance. Do not round intermediate calculations.) MARIANA COMPANY Overhead Variance Report For Month Ended May 31 Expected 20% of capacity Actual 20% of capacity EQUEUEA awnjon 3,075 @ Favorable Actual Controllable Variance Flexible Budget Results Variances Favorable/Unfavorable Variable overhead costs: Indirect materials 18.225 $ 16,200 2,025 @ Favorable Indirect labor 33,609 27,000 x 6,609 x Favorable Power 6,075 6,075 D No variance Maintenance 5,400 x 6,710 1,310 * Unfavorable Total variable overhead costs (@ 83,309 65,985 7,324 * Favorable Fixed overhead costs: Rent of building 23,000 23,000 0 No variance Depreciation-Machinery 10,800 10,800 0 No variance V Supervisory salaries 14,800 18,200 3,400 @ Unfavorable Total fixed overhead costs @ 48,600 52,000 3,400 @ Unfavorable Total overhead costs 111,909 107,985 $ 3,924 * Unfavorable Volume Variance Budgeted (flexible) overhead @ 83,309 (x Standard overhead applied 48,600 % Volume variance 6,075 @ Favorable Total overhead varianceFor May. Mariana company planned production of 10,000 units (80% of its production capacity of 12,500 units) and prepared the following overhead budget. The company applies overhead with a standard of 3 DLH per unit and a standard overhead rate of $4 per DLH. 80% Operating Overhead Budget Level Production (in units) 10, 098 Budgeted overhead Variable overhead costs Indirect materials $ 16, 209 Indirect labor 27, 090 Power 5,490 Maintenance 5,498 Total variable overhead costs 54, 090 Fixed overhead costs Rent of building 23, 098 Depreciation-Machinery 10, 898 Supervisory salaries 14, 890 Total fixed overhead costs 48, 609 Total overhead $ 102, 608 It actually operated at 90% capacity (11,250 units) in May and incurred the following actual overhead. Actual Overhead Costs Indirect materials $ 16, 290 Indirect labor 29, 875 Power 6,975 Maintenance 6, 710 Rent of building 23, 090 Depreciation-Machinery 10, 898 Supervisory salaries 18,298 Actual total overhead $ 110, 868 1. Compute the overhead controllable variance and identify it as favorable or unfavorable. 2. Compute the overhead volume variance and identify it as favorable or unfavorable. 3. Prepare an overhead variance report at the actual activity level of 11,250 units