Problem $10$A$-8($Algo$)$ Applying Overhead; Overhead Variances $[$L$010-3,$ LO$10-4]$

Lane Company manufactures a single product requiring a great deal of hand labor. Overhead cost is applied based on standard direct

labor$-$hours. The budgeted variable manufacturing overhead is $$2\mathrm{.}40$ per direct labor$-$hour and the budgeted fixed manufacturing

overhead is $$384,000$ per year.

The standard quantity of materials is $4$ pounds per unit and the standard cost is $$4\mathrm{.}00$ per pound. The standard direct labor$-$hours per

unit is $1\mathrm{.}5$ hours and the standard labor rate is $$12\mathrm{.}20$ per hour.

The company planned to operate at a denominator activity level of $60,000$ direct labor$-$hours and to produce $40,000$ units during the

most recent year. Actual activity and costs for the year were as follows:

Actual number of units produced

Actual direct labor$-$hours worked

Actual variable manufacturing overhead cost incurred

Actual fixed manufacturing overhead cost incurred

$48,000$

$78,000$

$$124,800$

$$429,000$

Required:

Compute the predetermined overhead rate for the year. Break the rate down into variable and fixed elements.

Prepare a standard cost card for the company's product.

$3$a$.$ Compute the standard direct labor$-$hours allowed for the year's production.

$3$b$.$ Complete the following Manufacturing Overhead T$-$account for the year.

Determine the reason for any underapplied or overapplied overhead for the year by computing the variable overhead rate and

efficiency variances and the fixed overhead budget and volume variances.

Complete this question by entering your answers in the tabs below.

Compute the predetermined overhead rate for the year. Break the rate down into variable and fixed elements.

Note: Round your answers to $2$ decimal places.

Prepare a standard cost card for the company's product.

Note: Round your answers to $2$ decimal places.

Standard direct labor hours

Complete the following Manufacturing Overhead T$-$account for the year.