1. Compute the predetermined overhead rate. Break the rate down into variable and fixed cost elements.

2. Show how the $300,000 Applied figure in the Manufacturing Overhead account was computed.

3. Breakdown the $24,750 underapplied overhead into four components: (1) variable overhead rate variance, (2) variable overhead efficiency variance, (3) fixed overhead budget variance, and (4) fixed overhead volume variance.

Chilczuk, S.A., of Gdansk, Poland, is a major producer of classic Polish sausage. The company uses a standard cost system to help control costs. Manufacturing overhead is applied to production on the basis of standard direct labor-hours. According to the company's planning budget, the following manufacturing overhead costs should be incurred at an activity level of 27,000 labor-hours (the denominator activity level): Variable manufacturing overhead cost Fixed manufacturing overhead cost Total manufacturing overhead cost $ 135,000 189,000 $ 324,000 During the most recent year, the following operating results were recorded: 24,000 25,000 Activity: Actual labor-hours worked Standard labor-hours allowed for the actual output Cost: Actual variable manufacturing overhead cost incurred Actual fixed manufacturing overhead cost incurred $ 156,000 $ 168,750 At the end of the year, the company's Manufacturing Overhead account contained the following data: Actual Manufacturing Overhead 324,750 Applied 24,750 300,000 Management would like to determine the cause of the $24,750 underapplied overhead. Required: 1. Compute the predetermined overhead rate. Break the rate down into variable and fixed cost elements. 2. Show how the $300,000 Applied figure in the Manufacturing Overhead account was computed. 3. Breakdown the $24,750 underapplied overhead into four components: (1) variable overhead rate variance, (2) variable overhead efficiency variance, (3) fixed overhead budget variance, and (4) fixed overhead volume variance