Sedona Company set the following standard costs for one unit of its product for 2017.

Direct material (20 Ibs. @ $2.50 per Ib.)		$	50.00
Direct labor (10 hrs. @ $22.00 per hr.)			220.00
Factory variable overhead (10 hrs. @ $4.00 per hr.)			40.00
Factory fixed overhead (10 hrs. @ $1.60 per hr.)			16.00
Standard cost		$	326.00

The $5.60 ($4.00 + $1.60) total overhead rate per direct labor hour is based on an expected operating level equal to 75% of the factory's capacity of 50,000 units per month. The following monthly flexible budget information is also available.

		Operating Levels (% of capacity)
Flexible Budget			70%				75%				80%
Budgeted output (units)			35,000				37,500				40,000
Budgeted labor (standard hours)			350,000				375,000				400,000
Budgeted overhead (dollars)
Variable overhead		$	1,400,000			$	1,500,000			$	1,600,000
Fixed overhead			600,000				600,000				600,000
Total overhead		$	2,000,000			$	2,100,000			$	2,200,000

During the current month, the company operated at 70% of capacity, employees worked 340,000 hours, and the following actual overhead costs were incurred.

Variable overhead costs		$	1,375,000
Fixed overhead costs			628,600
Total overhead costs		$	2,003,600

AH = Actual Hours SH = Standard Hours AVR = Actual Variable Rate SVR = Standard Variable Rate SFR = Standard Fixed Rate

AH = Actual Hours SH = Standard Hours AVR = Actual Variable Rate SVR = Standard Variable Rate SFR = Standard Fixed Rate

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 75% of capacity.
	Predetermined OH Rate
Variable overhead costs	$4.00	per DL hr.
Fixed overhead costs	1.80	per DL hr.
Total overhead costs
(2) Compute the total variable and total fixed overhead variances and classify each as favorable or unfavorable.
			--------At 70% of Operating Capacity--------
		Standard DL Hours	Overhead Costs Applied	Actual Results	Variance	Fav./Unf.
Variable overhead costs
Fixed overhead costs
Total overhead costs