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Exercise 8-22 Overhead controllable and volume variences; overhead variance report LO P3 Blaze Corp. apples overhead on the basis of direct labor hours. For the month of March, the company planned production of 10,000 units (80% of its production capacity of 12,500 unlts) and prepared the following budget Operating Levels Overhead Budget Production in units 18,e0e 24,000 Standard direct labor hours Budgeted overhead Variable overhead costs Indirect materials 25,000 35,000 7,608 4,408 Indirect 1abor r Maintenance Total variable costs 72.000 Fixed overhead costs Rent of factory building Depreciation-Machinery Taxes and insurance 25,000 35,000 4.000 28.000 salaries Total fixed costs 84,e08 Total overhead costs $156,e0e During March, the company operated at 90 % capacity (11,250 units), and t Incurred the following actual overhead costs. Overhead Costs $ 25,000 35,000 8,550 6,598 25,008 33,000 4,500 22,e00 Indirect materials Indirect 1abor Power Maintenance http:/ Rent of factory building Depreciation-Machinery Taxes and insurance Supervisory salaries $159,640 Total actual overhead costs 1. Compute the overhead controllable varlance. 2 Compute the overhead volume varlance. 3. Prepare an overhead varlance report at the actual activity level of 9,000 unlts. Controllable Variance $159,640 Total actual overhead Flexible budget overhead Variable Fixed 41,447 84,000 125.447 34,193 Favorable Total Overhead controllable variance Volume Variance Total budgeted foxed OH Total fixed overhead applied 84,000 145,086 $ 61,080 Favorable Volume variance BLAZE CORP. Overhead Variance Report For Month Ended March 31 80 % of capacity 80% of capacity Expected production volume Production level achieved 61,088 Favorable Flexible Budget Actual Results Volume variance Controllable Variance Variances Fav./Unfav. Variable overhead costs Favorable Favorable Indirect materials Indirect labor Power Maintenance Unfavorable Total variable costs Favorable Fixed overhead costs: Rent of factory building Depreciation-Machinery Supervisory salaries Favorable Unfavorable Total fixed costs Unfavorable Unfavorable Total overhead costs