Lane Company manufactures a single product that requires a great deal of hand la

Question

Lane Company manufactures a single product that requires a great deal of hand labor. Overhead cost is applied on the basis of standard direct labor-hours. Variable manufacturing overhead should be $3.20 per standard direct labor-hour and fixed manufacturing overhead should be $864,000 per year. The company's product requires 4 pounds of material that has a standard cost of $6.00 per pound and 1.5 hours of direct labor time that has a standard rate of $12.60 per hour. The company planned to operate at a denominator activity level of 120,000 direct labor-hours and to produce 80,000 units of product during the most recent year. Actual activity and costs for the year were as follows: Number of units produced 96,000 Actual direct labor-hours worked 156,000 Actual variable manufacturing overhead cost incurred $ 312.000 Actual fixed manufacturing overhead cost incurred $ 936,000 Required: Compute the predetermined overhead rate for the year. Break the rate down into variable and fixed elements. (Round your answers to 2 decimal places.) Prepare a standard cost card for the company's product. (Round your answers to 2 decimal places.)

Explanation / Answer

1)

2)

Predetrmined overhead rate $ 10.40 per DLH Variable overhead $   3.20 per DLH Fixed overhead $   7.20 per DLH

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