Lane Company manufactures a SIngle product and applies overhead cost to that pro

Question

Lane Company manufactures a SIngle product and applies overhead cost to that product using standard direct labor-hours. The budgeted varlable manufacturing overhead Is $3.20 per direct labor-hour and the budgeted fixed manufacturing overhead is $864,000 per year The standard quantity of materlals is 4 pounds per unit and the standard cost is $6.00 per pound. The standard direct labor-hours per unit Is 1.5 hours and the standard labor rate is $1260 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: Actual number of units produced Actual direct labor-hours worked Actual variable manufacturing overhead cost incurred Actual fixed manufacturing overhead cost incurred 96,888 156,808 312,88e $ 936,880 Requlrec 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 overapplled overhead for the year by computing the varlable overhead rate and efficiency varlances and the fixed overhead budget and volume varlances. Complete this question by entering your answers in the tabs below Req 1 Req 2 Req 3A Req 3B 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 Fixed rate per DLH per DLH per DLH

Explanation / Answer

Pre Determined Rate = Budgeted overhead for the period Budgeted basis for the period Actual Variable Manufacturing OH Cost = $312,000.00 Actual Fixed Manufacturing OH Cost = $936,000.00 Actual units produced =                                                      96,000 units Actual Direct labour hours worked =                                                     156,000 labour hours Budgeted Variable Manufacturing OH = $3.20 per labour hour Budgeted Fixed Manufacturing OH = $864,000.00 Standard Quantity per unit - 4 pounds = $6.00 per pound Standard direct labour hours per unit - 1.5hrs = $12.60 per hour operating capacity = 120000 labour hours = 80000 units Standard Quantity 4 pounds ==> 1 unit ? Pounds ==> 80000 units 80000*4 = 320000 pounds Standard Qunatity                        (320000*6) = $1,920,000.00 Standard Labour Hour Rate 1.5 hours ==> 1 unit ? Hours ==> 80000 units 80000*1.5 120000 Standard Labour Hour Rate      (120000*12.6) = $1,512,000.00 Pre Determined Rate = $1,248,000.00 $1,512,000.00 = 0.83

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