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. Break down 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.