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U. Direct material (30 pounds @ $2.60 per pound) Direct labor (20 hours $4.70 per DLH) Variable overhead (20 hours @ $2.60 per DLH) Fixed overhead (20 hours @ $1.20 per DLH) Standard cost per unit $ 78.00 94.00 52.00 24.00 $ 248.00 The $3.80 ($2,60 + $1.20) total overhead rate per direct labor hour (DLH) is based on a predicted activity level of 36,600 units, which is 60% of the factory's capacity of 61,000 units per month. The following monthly flexible budget information is available. Flexible Budget Budgeted production (units) Budgeted direct labor (standard hours) Budgeted averhead Variable overhead Fixed overhead Total overhead Operating Levels ($ of capacity) 55% 60x 65% 33,550 36,600 39,650 671,000 732,000 793,000 $ 1,744,600 878,400 $ 2,623,000 $ 1,903,200 878,400 $ 2,781,600 $ 2,061,800 878,400 $ 2,940, 200 During the current month, the company operated at 55% of capacity, direct labor of 652,000 hours were used, and the following actual overhead costs were incurred. Actual variable overhead Actual fixed overhead Actual total overhead $ 1,714,000 918,000 $ 2,632,000 7. 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 56% of Operating Capacity-- Overhead Costs Actual Results Variance Applied Favorable/Unfavorable $ Variable overhead applied Fixed overhead appled Total overhead variance 260 1.20 3.80 Favorable Unfavorable Unfavorable $

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