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 this year. Direct material (20 pounds @ $2.10 per pound) Direct labor (10 hours @ $8.80 per DLH) Variable overhead (10 hours @ $4.00 per DLH) Fixed overhead (10 hours @ $1.80 per DLH) Standard cost per unit The $5.80 ($4.00+ $1.80) total overhead rate per direct labor hour (DLH) is based on a predicted activity level of 49,000 units, which is 70% of the factory's capacity of 70,000 units per month. The following monthly flexible budget information is available. Flexible Budget Budgeted production (units) Budgeted direct labor (standard hours) Budgeted overhead. Variable overhead Fixed overhead. Total overhead. Actual variable overhead Actual fixed overhead. Actual total overhead. $ 1,765,000 943,000 $ 2,708,000 Standard Direct Labor Hours Overhead Rate Variable overhead variance Fixed overhead variance $ $ 42.00 88.00 40.00 18.00 $ 188.00 During the current month, the company operated at 65% of capacity, direct labor of 435,000 hours were used, and the following actual overhead costs were incurred. 4.00 1.80 Operating Levels (of capacity) 659 75% 45,500 455,000 Standard Direct Labor Hours 70% 49,000 490,000 $ 1,820,000 882,000 $ 1,960,000 882,000 $ 2,702,000 $ 2,842,000 1. 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.) At 65% of Operating Capacity 52,500 525,000 $ 2,100,000 882,000 $ 2,982,000 Standard Actual Overhead Applied Overhead 943,000 Overhead Variance Favorable/Unfavorable