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 2017. Direct material (20 Ibs. @ $3.70 per Ib.) Direct labor (10 hrs. @ $8.80 per hr.) Factory variable overhead (10 hrs. @ $4.20 per hr.) Factory fixed overhead (10 hrs. @ $2.30 per hr.) Standard cost $ 74.00 88.00 42.00 23.00 $ 227.00 The $6.50 ($4.20 + $2.30) total overhead rate per direct labor hour is based on an expected operating level equal to 70% of the factory's capacity of 62,000 units per month. The following monthly flexible budget information is also available. Operating Levels (% of capacity) 65% 70% 75% 40,300 43,400 46,500 403,000 434,000 465,000 Flexible Budget Budgeted output (units) Budgeted labor (standard hours) Budgeted overhead (dollars) Variable overhead Fixed overhead Total overhead $1,692,600 998, 200 $ 2,690,800 $1,822,800 998, 200 $2,821,000 $1,953,000 998, 200 $2,951,200 During the current month, the company operated at 65% of capacity, employees worked 389,000 hours, and the following actual overhead costs were incurred. Variable overhead costs Fixed overhead costs Total overhead costs $1,650,000 1,048,000 $ 2,698,000 AH = Actual Hours SH = Standard Hours AVR = Actual Variable Rate SVR = Standard Variable Rate SFR = Standard Fixed Rate (1) Compute the predetermined overhead application rate per hour for variable overhead, fixed overhead, and total overhead at 70% of capacity. Predetermined OH Rate Variable overhead costs Fixed overhead costs Total overhead costs Fav./Unf. (2) Compute the total variable and total fixed overhead variances and classify each as favorable or unfavorable. --------At 65% of Operating Capacity-------- Standard DL Overhead Actual Variance Hours Costs Applied Results Variable overhead costs Fixed overhead costs Total overhead costs