Interpreting Overhead Budget Data. The following data come from a manu- facturing overhead section of a master budget for Reed Products:

Required:
1. What was the apparent normal volume? Explain how you know this.
2. Explain the overapplied or underapplied overhead variance for each quarter and for the year. Why is it underapplied for the year?
3. Based on the data and your knowledge of flexible budgeting, what is Reed Products expected to spend on manufacturing overhead for the year?

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Manufacturing Overhead Flexible Budget: Variable overhead expenses ($1.50 per unit)... Fixed overhead expenses ($10,500 per quarter) Total flexible overhead budget. Variable overhead rate per unit Fixed overhead rate per unit... Manufacturing overhead rate per unit Manufacturing Overhead Spending Budget by Quarter: Activity Levels in Units 6,500 7,000 $ 9,750 $10,500 7,500 $11,250 10,500 10,500 10,500 $20,250 $21,000 $21,750 $ 1.50 1.50 $ 3.00 Q-1 Q-2 Q-3 Q-4 Total Budgeted volume (units)...... 6,800 6,500 6,900 7,400 27,600 Budgeted spending: Variable overhead expenses... $10,200 $ 9,750 $10,350 $11,100 $41,400 Fixed overhead expenses 10,500 10,500 10,500 10,500 42,000 Total overhead expenses $20,700 $20,250 $20,850 $21,600 $83,400 Budgeted applied: Variable overhead applied $10,200 $ 9,750 $10,350 $11,100 $41,400 Fixed overhead applied... 10,200 9,750 10,350 11,100 41,400 Total overhead applied. Overapplied or (underapplied). $20,400 $19,500 $20,700 $22,200 $ (300) $ (750) $ (150) $ 600 $82,800 $ (600)