Lane Company manufactures a single product and applies overhead cost to that pro
ID: 2429953 • Letter: L
Question
Lane Company manufactures a single product and applies overhead cost to that product using standard direct labor-hours. The budgeted variable manufacturing overhead is $2.80 per direct labor-hour and the budgeted fixed manufacturing overhead is $612,000 per year The standard quantity of materials is 4 pounds per unit and the standard cost is $5.00 per pound. The standard direct labor-hours per unit is 1.5 hours and the standard labor rate is $12.40 per hour The company planned to operate at a denominator activity level of 90,000 direct labor-hours and to produce 60,000 units of product 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 72,809 117,083 s 210,680 S 643,5e3 Required 1. Compute the predetermined overhead rate for the year. Break the rate down into variable and fixed elements. 2 Prepare a standard cost card for the company's product 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 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. Req 1 Req 2 Req 3A Req 38 Req 4 Compute the predetermined overhead rate for the year. Break the rate down into variable and fixed elements. (Round your answers to 2 decimal places.) Predetermined overhead rate Variable rate per DLH per DLH per OLH Fbed rateExplanation / Answer
1)
2)
3a)standard hours allowed = 72000*1.5 = 108000 hours
3b)
4)Variable overhead rate variance =Actual variable overhead - [AH*SR]
=210600 - [117000*2.8]
= 210600 - 327600
= -117000 F
Variable overhead efficiency variance = SR [AH-SH]
= 2.8 [117000- 108000]
= 25200 U
Fixed overhead budget variance =Actual - budgeted
= 643500 -612000
= 31500 U
Fixed overhead volume variance = Budgeted amount -standard cost
= 612000 - [6.8 * 108000]
= 612000 - 734400
=-124400 F
Variable overhead per Direct labor hours 2.8 Fixed overhead per DLH [612000/90000] 6.8 predetermined overhead rate $ 9.6 per DLHRelated Questions
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