! Required information [The following information applies to the questions displayed below.) Sedona Company set the following standard costs for one unit of its product for this year. Direct material (20 pounds @ $2.50 per pound) Direct labor (10 hours @ $22.00 per DLH) Variable overhead (10 hours @ $4.00 per DLH) Fixed overhead (10 hours @ $1.60 per DLH) Standard cost per unit $ 50.00 220.00 40.00 16.00 $ 326.00 The $5.60 ($4.00+ $1.60) total overhead rate per direct labor hour (DLH) is based on a predicted activity level of 37,500 units, which is 75% of the factory's capacity of 50,000 units per month. The following monthly flexible budget information is available. Operating Levels (% of capacity) 708 75% 808 35,000 37,500 40,000 350,000 375,000 400,000 Flexible Budget Budgeted production (units) Budgeted direct labor (standard hours) Budgeted overhead Variable overhead Fixed overhead Total overhead $ 1,400,000 600,000 $ 2,000,000 $ 1,500,000 600,000 $ 2,100,000 $ 1,600,000 600,000 $ 2,200,000 During the current month, the company operated at 70% of capacity, direct labor of 340,000 hours were used, and the following actual overhead costs were incurred. Actual variable overhead Actual fixed overhead Actual total overhead $ 1,375,000 628,600 $ 2,003,600 1. Compute the total variable overhead variance and identify it as favorable or unfavorable. (Indicate the effect of the variance by selecting favorable, unfavorable, or no variance.) 2. Compute the total fixed overhead variance and identify it as favorable or unfavorable. (Indicate the effect of the variance by selecting favorable, unfavorable, or no variance.) Predetermined OH Rate Standard DL Hours --------At 70% of Operating Capacity-------- Overhead Costs Actual Results Variance Applied Favorable/Unfavorable $ 4.00 Variable overhead applied Fixed overhead applied Total overhead variance 1.60 $ 5.60