Question

please answer the required 1-4, thank you.

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 $4.60 per direct labor-hour and the budgeted fixed manufacturing overhead is $1,935,000 per year. The standard quantity of materials is 4 pounds per unit and the standard cost is $9.50 per pound. The standard direct labor-hours per unit is 1.5 hours and the standard labor rate is $13.30 per hour. The company planned to operate at a denominator activity level of 225,000 direct labor-hours and to produce 150,000 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 180,000 292,500 S 789,750 $2,047,500 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 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. Req 1 Reg 2 Req 3A Req 3B Req 4 Complete the following Manufacturing Overhead T-account for the year <Prev 5 of 6 Next MacBook

Answer 1

Lane Company Required: 1 Compute the predetermined overhead rate for the year. Break the rate down into variable and fixed elements SolutionPredetermined Overhead rate $2970000/225000 DLH $13.2 per DLH Variable Rate= $1035000/225000 $4.60 per DLH Fixed Rate $1935000/225000 $8.60 per DLH 2 Prepare a standard cost card for the company's product Amount (in $) Total Amount (in $) Solution: Direct Materials Pounds at 9.5 Per Pound 5700000 600000 Direct Labor 225000 Per DLH 2992500 DLHS at 13.3 Variable Overhead 225000 DLHS at Per DLH 1035000 4.6 Fixed Overhead 225000 DLHS at 8.6 Per DLH 1935000 Total No. of Units 150,000 Total 11662500 Standard cost per 77.75 Unit 3a Compute the standard direct labor-hours allowed for the year's production Solution: Standard direct labor - hours for the year's production (i.e 180,000 units) = 180000 1.5 270000 DLHS 3b Complete the following Manufacturing Overhead T-account for the year: Using actual costs, applied costs, and standard costs to compute the overhead and determine with it is over or underapplied Solution: Manufacturing Overhead A/c Particulars Particulars Amount Amount To Actual Costs Fixed Overhead Variable Overhead By Applied/Standard Costs 2047500 Fixed Overhead 1935000 1035000 789750 Variable Overhead 132750 By Balance c/d By Balance c/d 2970000 2970000 Note - In this case Manufacturing Overhead is Overapplied, Because Actual Overhead is lower than the applied Overhead

4 Determine the reason for the underapplied or overapplied overhead from (3) above by computing the variable overhead rate and efficiency variances and the fixed overhead budget and volume variances. 1 Variable overhead rate variance= (SR*AU)-Actual variable overhead cost SR*(Actual Hrs - Standard Hrs) 38250 103500 -245250 387000 2 Variable overhead efficiency variance= U 3 Fixed Overhead Budget Variance 4 Fixed Overhead Volume Variance Actual Fixed overhead cost Standard Fixed Ove (AU*FOHR) (BUDGETED UNIT *FOHR) Standard Variable overhead rate (SR) 4.60 per DLHS Actual variable overhead cost 789750 Actual unit (AU) 180000 Actual Hrs. per unit 292500.00 Standard Hrs. per unit 270000 Standard fixed overhead absorption rate (FOHR) 12.9 per unit