Baird Company makes classic Polish sausage. The company uses a standard cost system to help control costs. Manufacturing overhead is applied to production on the basis of standard direct labor-hours. According to the companys planning budget, the following manufacturing overhead costs should be incurred at an activity level of 20,000 labor-hours (the denominator activity level):

Variable manufacturing overhead cost	$ 65,000
Fixed manufacturing overhead cost	105,000
Total manufacturing overhead cost	$ 170,000

During the most recent year, the following operating results were recorded:

Activity:
Actual labor-hours worked	17,000
Standard labor-hours allowed for the actual output	18,000
Cost:
Actual variable manufacturing overhead cost incurred	$ 74,800
Actual fixed manufacturing overhead cost incurred	$ 90,000

At the end of the year, the companys Manufacturing Overhead account contained the following data:

Manufacturing Overhead
Debit		Credit
Actual	164,800	Applied	153,000
	11,800

Management would like to determine the cause of the $11,800 underapplied overhead.

Required:

1. Compute the predetermined overhead rate. Break the rate down into variable and fixed cost elements.

2. Show how the $153,000 Applied figure in the Manufacturing Overhead account was computed.

3. Breakdown the $11,800 underapplied overhead into four components: (1) variable overhead rate variance, (2) variable overhead efficiency variance, (3) fixed overhead budget variance, and (4) fixed overhead volume variance.

Required 1 Required 2 Required 3 Compute the predetermined overhead rate. Break the rate down into variable and fixed cost elements. answers to 2 decimal places.) Predetermined overhead rate $ 8.50 per hour 3.25 per hour Variable element $ Fixed element $ 5.25 per hour Required 1 Required 2 Required 3 Show how the $153,000 Applied figure in the Manufacturing Overhead account was computed. (Roun to 2 decimal places.) standard hours allowed * per hour = Required 1 Required 2 Required 3 Breakdown the $11,800 underapplied overhead into four components: (1) variable overhead rate varia overhead efficiency variance, (3) fixed overhead budget variance, and (4) fixed overhead volume varia effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e all amounts as positive values.) Variable overhead: Rate variance Efficiency variance Fixed overhead: Budget variance Volume variance