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James Corp. applies overhead on the basis of direct labor hours. For the month of May, the company planned production of 10,000 units (80% of its production capacity of 12,500 units) and prepared the following overhead budget: Operating Levels 80% 10,000 25,000 Overhead Budget Production in units Standard direct labor hours Budgeted overhead Variable overhead costs Indirect materials Indirect labor Power Maintenance Total variable costs Fixed overhead costs Rent of factory building Depreciation Machinery Supervisory salaries Total fixed costs Total overhead costs $18,000 25,000 5,000 2,000 50,000 18,000 11,500 15,500 45,000 $95,000 During May, the company operated at 90% capacity (11,250 units) and incurred the following actual overhead costs: Overhead costs (actual) Indirect materials Indirect labor Power Maintenance Rent of factory building Depreciation-Machinery Supervisory salaries Total actual overhead costs $ 18,000 27,875 5,625 3,065 18,000 11,500 18,500 $102,565 1. Compute the overhead controllable variance and classify it as favorable or unfavorable. 2. Compute the overhead volume variance and classify it as favorable or unfavorable. 3. Prepare an overhead variance report at the actual activity level of 11,250 units. 1. Compute the overhead controllable variance and classify it as favorable or unfavorable. 2. Compute the overhead volume variance and classify it as favorable or unfavorable. 3. Prepare an overhead variance report at the actual activity level of 11,250 units. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute the overhead controllable variance and classify it as favorable or unfavorable. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance.) Controllable variance $ 102,565 Total actual overhead Flexible budget overhead Fixed $ 45,000 Variable Total 45,000 Overhead controllable variance Unfavorable Required 1 Required 2 > 1. Compute the overhead controllable variance and classify it as favorable or unfavorable. 2. Compute the overhead volume variance and classify it as favorable or unfavorable. 3. Prepare an overhead variance report at the actual activity level of 11,250 units. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute the overhead volume variance and classify it as favorable or unfavorable. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance. Do not round intermediate calculations.) Volume Variance Total budgeted fixed OH Total fixed overhead applied Volume variance 1. Compute the overhead controllable variance and classify it as favorable or unfavorable. 2. Compute the overhead volume variance and classify it as favorable or unfavorable. 3. Prepare an overhead variance report at the actual activity level of 11,250 units. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare an overhead variance report at the actual activity level of 11,250 units. Classify as favorable or unfavorable. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance. Do not round intermediate calculations.) Expected production volume Production level achieved JAMES CORP. Overhead Variance Report For Month Ended May 31 80% of capacity 90% of capacity Favorable Flexible Budget Actual Results Volume variance Variances Fav./Unfav. Controllable Variance Variable overhead costs: Indirect materials Indirect labor 18,000 27,875 5,625 3,065 Power Maintenance Unfavorable 54,565 Total variable costs Fixed overhead costs: Rent of factory building Depreciation Machinery Supervisory salaries 18,000 11,500 15,500 18,000 11,500 18,500 O No variance O No variance 3,000 Unfavorable Total fixed costs Total overhead costs 45,000 45,000 48,000 102,565 3,000 Unfavorable Unfavorable $
