Help Save& ExitSubmit Check my work Lane Company manufactures a single product a
ID: 2539482 • Letter: H
Question
Help Save& ExitSubmit Check my work Lane Company manufactures a single product and applies overhead cost to that product using standard direct labor-hours. The budgeted variable manufacturing overhead is $5.80 per direct labor-hour and the budgeted fixed manufacturing overhead is $3,087000 per year The standard quantity of materials is 4 pounds per unit and the standard cost is $12.50 per pound. The standard direct labor-hours per unit is 1.5 hours and the standard labor rate is $13.90 per hour The company planned to operate at a denominator activity level of 315,000 direct labor-hours and to produce 210,000 units of product during the most recent year. Actual activity and costs for the year were as follows: Actual nunber of units prodaced Actual direet labor-hours worked Actual variable nanafacturing overhead cost incurred $1,351,350 252,000 409,500 Actual fixed sanufacturing overhead cost ineurred 3,276,000 Required 1. Compute the predetermined overhead rate for the year. Break the rate down into variable and fixed elements 2. Prepare a standard cost card for the company's product 3a. Compute the standard direct labor-hours allowed for the year's production 3b. Complete the following Manufacturing Overhead T-account for the year 4 Determine the reason for any underapplied or overapplied overhead f efficiency variances and the fixed overhead budget and volume variances for the year by computing the variable overhead rate and Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3A Req 38 Req 4 5 6 8Explanation / Answer
1)Variable manufacturing overhead :$ 5.8 per DLH
Fixed manufacturing overhead: = Estimated fixed overhead /eSTimated DLH
= 3087000/315000
= $ 9.8 per DLH
Total predetermined overhead : 5.8+9.8 =15.6
2)
3a)direct labor hours allowed= actual units produced *StandardDLH
= 252000*1.5
= 378000 DLH
3B)
4)
Variable overhead rate variance :Actual variable overhead -[AHSR]
= 1351350-[409500*5.8]
= 1351350 - 2375100
= - 1023750 F
Variable overhead efficiency variance :SR [AH-SH]
=5.8 [409500- 378000]
= 182700 U
fixed overhead budget variance =actual -budgeted overhead
= 3276000-3087000
= 189000 U
Fixed overhead volume variance = budgeted -standard overhead
= 3087000- [378000*9.8]
= -617400 F
Direct material [4*12.5] 50 Direct labor [1.5*13.9] 20.85 Variable manufacturing overhead [1.5*5.8] 8.7 Fixed manufacturing overhead [1.5* 9.8] 14.70 Standard cost 94.25Related Questions
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