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 LevelsOverhead Budget 80%Production in units 10,000 Standard direct labor hours 25,000 Budgeted overhead Variable overhead costs Indirect materials $ 15,000 Indirect labor 25,000 Power 7,000 Maintenance 3,000 Total variable costs 50,000 Fixed overhead costs Rent of factory building 25,000 Depreciation—machinery 11,000 Supervisory salaries 14,000 Total fixed costs 50,000 Total overhead costs $ 100,000 During May, the company operated at 90% capacity (11,250 units) and incurred the following actual overhead costs:Overhead CostsIndirect materials $ 15,000 Indirect labor 27,725 Power 7,875 Maintenance 4,020 Rent of factory building 25,000 Depreciation—machinery 11,000 Supervisory salaries 17,600 Total actual overhead costs $ 108,220 1. Compute the overhead controllable variance.2. Compute the overhead volume variance. (Do not round intermediate calculations.)3. Prepare an overhead variance report at the actual activity level of 11,250 units.