$2).$ Problem $10-29$ Applying Overhead; Overhead Variances $[$LO$4,$ LO$5,$ LO$6]22$ marks

Required:

$1.$ Compute the predetermined overhead rate for the year. Break the rate down into variable and fixed components. $6$ marks

$2.$ Do the following:

a$.$ Compute the standard direct labour$-$hours allowed for the year$$s production. $2$ marks

b$.$ Complete the following manufacturing overhead T$-$account for the year: $3$ marks

$3.$ Determine the reason for the underapplied or overapplied overhead from requirement $(2)$ above by computing the variable overhead spending 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$).)5$ marks

$4.$ If the company had chosen $18,000$ direct labour$-$hours as the denominator activity rather than $15,000$ hours, indicate which of the following variance given below would change. $6$ marks