Question

please solve this 4 requirement for me, thanks!

Problem 10A-8 Applying Overhead; Overhead Variances (LO10-3, LO10-4] 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 $3.40 per direct labor-hour and the budgeted fixed manufacturing overhead is $999,000 per year. The standard quantity of materials is 4 pounds per unit and the standard cost is $6.50 per pound. The standard direct labor-hours per unit is 1.5 hours and the standard labor rate is $12.70 per hour. The company planned to operate at a denominator activity level of 135,000 direct labor-hours and to produce 90,000 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 108,000 175,500 368,550 $1,053,000 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.

Answer 1

Answer 1:

Predetermined overhead rate = Budgeted variable manufacturing overhead rate + Budgeted fixed manufacturing overhead / Planned direct labor hour

= $3.40 + 999000 / 135000

= $3.40 + $7.40

= $10.80 Per DLH

Variable rate = $3.40 Per DLH

Fixed rate = 999000 /135000 = $7.40 Per DLH

Predetermined overhead rate Variable rate Fixed rate $10.40 per DLH $3.40 per DLH $7.40 per DLH

Answer 2:

Standard Cost card: Direct Material Direct labor Variable overhead Fixed Overhead Standard cost per unit 4 pounds at 1.5 DHLs at 1.5 DHLs at 1.5 DHLs at $6.50 per pound $12.70 per DLH $3.40 per DLH $7.40 per DLH $26.00 $19.05 $5.10 $11.10 $61.25

Answer 3(a):

Actual number of units produced = 108,000

Standard direct labor hours allowed for year's production = 108000 * 1.5 = 162,000 DLH

Standard direct labor hours 162,000

Answer 3(b):

Manufacturing Overhead Beg.Balance $0 $1,749,600 Applied Overhead Actual Variable overhead $368,550 Actual Fixed overhead $1,053,000 $328,050 Ending Balance

Applied overhead =Standard direct labor hour for actual production * Predetermined overhead rate

= 162000 * 10.40

=$1,684,800

Answer 4:

Actual Variable overhead rate =

Variable overhead rate variance = Actual hours worked * Actual rate - Actual hours worked * Standard rate

= 368550 - 175500 * 3.40

=$228150 Favorable

Variable overhead efficiency variance = Actual hours * Standard overhead rate - Standard hours for actual production * Standard overhead rate

=175500 * 3.40 - 162000 * 3.40

= $45,900 Unfavorable

Fixed overhead budget variance = Actual fixed overheads -Total budgeted fixed overheads

= 1053000 - 999000

=$54,000 Unfavorable

Fixed Overhead Volume Variance= Amount budgeted - FOH applied

= 999000 - 162000 * 7.40

= $199,800 Favorable

F Variable overhead rate variance Variable overhead efficiency variance Fixed overhead budgeted variance Fixed Overhead Volume Variance $228,150 $45,900 $54,000 $199,800 U F