Lane Company manufactures a single product and applies overhead cost to that product using standard direct labor
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Question:
Lane Company manufactures a single product and applies overhead cost to that product using standard direct laborhours. The budgeted variable manufacturing overhead is $ per direct laborhour and the budgeted fixed manufacturing overhead is $ per year.
The standard quantity of materials is pounds per unit and the standard cost is $ per pound. The standard direct laborhours per unit is hours and the standard labor rate is $ per hour.
The company planned to operate at a denominator activity level of direct laborhours and to produce 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 laborhours worked
Actual variable manufacturing overhead cost incurred $
Actual fixed manufacturing overhead cost incurred $
Required:
Compute the predetermined overhead rate for the year. Break the rate down into variable and fixed elements.
Prepare a standard cost card for the companys product.
a Compute the standard direct laborhours allowed for the years production.
b Complete the following Manufacturing Overhead Taccount for the year.
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.
Related Book For
Managerial Accounting
ISBN: 978-0077522940
15th edition
Authors: Ray Garrison, Eric Noreen, Peter Brewer
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