Question

Prepare a standard cost card for the company's product. (Round your answer 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. The budgeted variable manufacturing overhead is $5.00 per direct labor-hour and the budgeted fixed manufacturing overhead is $2.295.000 per year. The standard quantity of materials is 4 pounds per unit and the standard cost is $10.50 per pound. The standard direct labor-hours per Direct materials pounds at per pound unit is 1.5 hours and the standard labor rate is $13.50 per hour. Direct labor DLHs at per DLH Variable overheadſ The company planned to operate at a denominator activity level of 255.000 direct labor-hours and to produce 170.000 units of DLHs at per DLH product during the most recent year. Actual activity and costs for the year were as follows: Fixed overhead DLHs at per DLH Standard cost per unit Actual number of units produced 284, 280 Actual direct labor-hours worked 331,500 Compute the standard direct labor-hours allowed for the year's production. Actual variable manufacturing overhead cost incurred $ 961,350 Actual fixed manufacturing overhead cost incurred $2.652.888 Standard direct labor hours Complete the following Manufacturing Overhead T-account for the year. Manufacturing Overhead Requlred: 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. 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. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) Reg 1 Reg 2 Reg 3A Reg 38 Reg 4 Compute the predetermined overhead rate for the year. Break the rate down into variable and fixed elements. (Round vour Variable overead rate variance answers to 2 decimal places.) Variable overhead efficiency variance Fixed overhead budget variance Fixed overhead volume variance Predetermined overhead rate Variable rate per DLH per DLH per DLH Fixed rate

Answer 1

1)
predetermined overhead rate					14
variable rate					5
fixed rate (2,295,000/255,000)					9
2)
Direct materials		4	pounds at	10.5	per pound	42
Direct labor		1.5	DLH'S	13.5	per DLH	20.25
Variable overhead		1.5	DLH'S at	5	per DLH	7.5
Fixed overhead		1.5	DLH'Sat	9	per DLH	13.5
Standard cost per unit						83.25
3)
Standard direct labor hours allowed for the years production=
Actual units produced *Direct labor hr per unit
204000*1.5
306000
3b)
Manufacturing overhead T-Account
Actual costs		3613350	Applied costs (306000*14))			4284000
			overhead overapplied			670650
4)
Variable overhead rate variance = (AR- Std rate)*AH
=(961,350-331,500*5)
			696150	F
Variable overhead efficiency variance = (AH-SH)*SR
=				(331500-306000)*5
				127500	U
Fixed overhead budget variance = actual overhead - budgeted oveerhead
2,652,000-2,295,000
			357000	U
fixed overhead volume variance= actual output*fixed overhead rate per unit-budgeted overhead
204000*13.5-2,295,000
			459,000	F