| The company planned to operate at a denominator activity level of 75,000 direct labor-hours and to produce 50,000 units of product during the most recent year. Actual activity and costs for the year were as follows: |
| Number of units produced | 60,000 |
| Actual direct labor-hours worked | 97,500 |
| Actual variable manufacturing overhead cost incurred | $ 165,750 |
| Actual fixed manufacturing overhead cost incurred | $ 536,250 |
| Required: | |
| 1. | Compute the predetermined overhead rate for the year. Break the rate down into variable and fixed elements. (Round your answers to 2 decimal places.) |
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[SOLVED] Question & Answer: Lane Company manufactures a single product that requires a great deal of hand labor. Overhead cost is applied
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| 2. | Prepare a standard cost card for the company’s product. (Round your answers to 2 decimal places.) |
| 3a. | Compute the standard direct labor-hours allowed for the year’s production. |
| 3b. | Complete the following Manufacturing Overhead T-account for the year: |
| 4. | Determine the reason for the underapplied or overapplied overhead from (3) above by computing the variable overhead rate and efficiency variances and the fixed overhead budget and volume variances. (Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance).) |
