[SOLVED] Question & Answer: Lane Company manufactures a single product that requires a great deal of hand labor. Overhead cost is applied

Lane Company manufactures a single product that requires a great deal of hand labor. Overhead cost is applied on the basis of standard direct labor-hours. Variable manufacturing overhead should be $2.60 per standard direct labor-hour and fixed manufacturing overhead should be $495,000 per year.

 

     The company’s product requires 4 pounds of material that has a standard cost of $4.50 per pound and 1.5 hours of direct labor time that has a standard rate of $12.30 per hour.
       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.)

 

Don't use plagiarized sources. Get Your Custom Essay on
[SOLVED] Question & Answer: Lane Company manufactures a single product that requires a great deal of hand labor. Overhead cost is applied
From $8/Page
Order Essay
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).)

 

Expert Answer

 

Solution

1.

Variable manufacturing overhead rate=$2.60 per DLH

Fixed manufacturing overhead rate:$495,000/75,000=$6.60 per DLH

Predetermined overhead rate=$2.60+$6.60

=$9.20 per DLH

2. Standard cost card:

Standard cost per unit
Direct material 4 pounds×$4.50 per pound $18
Direct labour 1.5 DLH×$12.30 per hour $18.45
Variable manufacturing overhead 1.5 DLH × $ 2.60 per hour $3.90
Fixed manufacturing overhead 1.5 DLH × $6.60 per hour $9.90
Total STD cost per unit $50.25 per unit

3.a.

Standard DLH allowed=60,000 units×$1.5 DLH

=90,000

3.b

Manufacturing overhead account:

Actual overhead cost incurred: Applied overhead:
Variable manufacturing overhead:165,750 (90,000 hours×$9.20 per hour,p $828,000
Fixed manufacturing overhead:$536,250 $702,000
Balance (over applied overhead) $126,000

lane company manufactures a single product

Related: Please do a ARNP protocol and Business proposal. Attached is my

paper writing help

Calculator

Calculate the price of your paper

Total price:$26
Our features

Paperwritinghelp247 is here for any paper writing help you need!

Need help with you custom essay ?

For decades, essaybankcorp are trusted essay writing company international For decades, paperwriting help 247 are truested essay writing company international