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Manuel Company predicts it will operate at 80% of its productive capacity. Its overhead allocation base is DLH and its standard amount per allocation base is 0.5 DLH per unit. The company reports the following for this period. Flexible Budget at 80% Capacity Actual Results Production (in units) 52,750 48,400 Overhead Variable overhead $ 290,125 Fixed overhead 52,750 Total overhead $ 342,875 $ 341,300

1. Compute the standard overhead rate. Hint: Standard allocation base at 80% capacity is 26,375 DLH, computed as 52,750 units 0.5 DLH per unit.

2. Compute the standard overhead applied.

3. Compute the total overhead variance. (Indicate the effect of the variance by selecting favorable, unfavorable, or no variance.)

	1. Standard overhead rate 2. Standard overhead applied 3. Overhead variance

(4) Compute the overhead volume variance. Indicate variance as favorable or unfavorable. (5) Compute the overhead controllable variance. Indicate variance as favorable or unfavorable.

Compute the overhead volume variance. Indicate variance as favorable or unfavorable. (Indicate the effect of the variance by selecting favorable, unfavorable, or no variance.)

	Volume Variance Volume variance

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