$2).$ Problem $10-29$ Applying Overhead; Overhead Variances $[$LO$4,$ LO$5,$ LO$6]22$ marks. Problem $10-29$ Applying Overhead; Overhead Variances $[$LO$4,$ LO$5,$ LO$6]22$ marks

Ryder Company produces a single product, school backpacks made of a sturdy nylon fabric. The production of these bags

requires a relatively large amount of labour time. Overhead cost is applied on the basis of standard direct labour$-$hours. The

company's condensed flexible budget for manufacturing overhead is given below:

Each backpack requires $2$ metres of direct material that has a standard cost of $$1\mathrm{.}50$ per metre. The product requires $1\mathrm{.}5$

hours of direct labour time. The standard labour rate is $$15$ per hour.

During the year, the company had planned to operate at a denominator activity level of $15,000$ direct labour$-$hours and to

produce $10,000$ units of product. Actual activity and costs for the year were as follows:

Required:

$1.$ Compute the predetermined overhead rate for the year. Break the rate down into variable and fixed components. $6$ marks

$2.$ Do the following:

a$.$ Compute the standard direct labour$-$hours allowed for the year$$s production. $2$ marks

b$.$ Complete the following manufacturing overhead T$-$account for the year: $3$ marks

$3.$ Determine the reason for the underapplied or overapplied overhead from requirement $(2)$ above by computing the variable overhead spending and efficiency variances and the fixed overhead budget and volume variances. $($Indicate the effect of each variance by selecting $"$F$"$ for favorable, $"$U$"$ for unfavorable, and "None" for no effect $($i$.$e$.,$ zero variance$).)5$ marks

$4.$ If the company had chosen $18,000$ direct labour$-$hours as the denominator activity rather than $15,000$ hours, indicate which of the following variance given below would change. $6$ marks