Question

Check my - - - ..- . - - - - - - ---- Complete this question by entering your answers in the tabs below. 10 points Req 1 Reg 2 Req 3A Req 3B Req 4 Complete the following Manufacturing Overhead T-account for the year. eBook Print Actual costs References Manufacturing Overhead 165.750 828,000 536,250 126,080 801 L < Req 3A Req 4 )
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 $2.60 per direct labor-hour and the budgeted fixed manufacturing overhead is $495,000 per year.

The standard quantity of materials is 4 pounds per unit and the standard cost is $4.50 per pound. The standard direct labor-hours per unit is 1.5 hours and the standard labor rate is $12.30 per hour.

The company planned to operate at a denominator activity level of 75,000 direct labor-hours and to produce 50,000 units of product during the most recent year. Actual activity and costs for the year were as follows:

Actual number of units produced		60,000
Actual direct labor-hours worked		97,500
Actual variable manufacturing overhead cost incurred	$	165,750
Actual fixed manufacturing overhead cost incurred	$	536,250

Required:

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.

Answer 1

1) predetermined overhead rate predetermined overhead rate variable fixed ==495000/75000 9.20 per DLH 2.60 per DLH 6.60 per DLH 18.00 18.45 2) standard cost card direct material direct labor variable overhead fixed overhead standard cost per unit 4 pounds at 1.5 DLHs at 1.5 DLHs at 1.5 DLHs at 4.50 per pound 12.30 per DLH 2.60 per DLH 6.60 per DLH 3.90 9.90 50.25 90000 3a) standard direct labor hours allowed 60000*1.5 3b)Manufacturing overhead (T account) 702,000 828,000 Applied cost *** actual cost** 126000 Over applied overhead**** working: **165750+536250 *** (90000*9.2) ****(828000-702000)

4. Reason for overapplied overhead Variable overhead hours rate 90000 total 234,000.00 STANDARD 2.60 ACTUAL 97500 165,750.00 1.70 (165750/97500) variable overhead RATE VARIANCE VARIABLE OVERHEAD EFFICIANCY VARIANCE (SR - ARXAH (SH - AH) X SR (2.6-1.7)*97500 (90000-97500)*2.6 87,750 F 19,500 u Fixed overhead budget variance fixed overhead volume variance budgeted overhead - actual overhead 495000-536250 overhead applied - budgeted overhead 90000*6.6-495000 41250 U 99000F SR AR SH AH STNANDARD RATE ACTUAL RATE STANDARD HOURS ACTUAL HOURS