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 (30 pounds @ $2.00 per pound) Direct labor (20 hours $4.50 per DLH) Variable overhead (20 hours @ $2.50 per DLH) Fixed overhead (20 hours $1.20 per DLH) Standard cost per unit $ 60.00 90.00 50.00 24.00 $224.00 The $3.70 ($2.50 $1.20) total overhead rate per direct labor hour (DLH) is based on a predicted activity level of 38,500 units, which is 70% of the factory's capacity of 55,000 units per month. The following monthly flexible budget information is available. Flexible Budget Budgeted production (units) Budgeted direct labor (standard hours) Budgeted overhead Variable overhead Fixed overhead Total overhead Operating Levels (% of capacity) 65% 35,750 715,000 $ 1,787,500 924,000 $ 2,711,500 70% 38,500 770,000 $ 1,925,000 924,000 $ 2,849,000 75% 41,250 825,000 $2,062,500 924,000 $ 2,986,500 During the current month, the company operated at 65% of capacity, direct labor of 678,000 hours were used, and the following actual overhead costs were incurred. Actual variable overhead Actual fixed overhead Actual total overhead $ 1,715,000 999,200 $ 2,714,200 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.) Flexible Budget Budgeted production (units). Budgeted direct labor (standard hours) Budgeted overhead Variable overhead Fixed overhead Total overhead Operating Levels (% of capacity) 65% 35,750 715,000 $ 1,787,500 924,000 $ 2,711,500 70% 38,500 770,000 $1,925,000 924,000 $ 2,849,000 75% 41,250 825,000 $ 2,062,500 924,000 $ 2,986,500 During the current month, the company operated at 65% of capacity, direct labor of 678,000 hours were used, and the following actual overhead costs were incurred. Actual variable overhead Actual fixed overhead Actual total overhead $ 1,715,000 999,200 $ 2,714,200 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.) Answer is complete but not entirely correct. At 65% of Operating Capacity- Standard Direct Labor Hours Overhead Rate Standard Direct Labor Hours Variable overhead 2.50 variance Fixed overhead variance. 1.20 715.000 Standard. Favorable/Unfavorable Overhead Actual Overhead Applied Overhead Variance 715,000 $ 1,787,500 $1,715,000 72.500 Favorable 858,000 999,200 141,000 Unfavorable