Lane Company manufactures a single product that requires a great deal of hand labor. Overhead cost is applied on the basis of standard direct labor-hours. The budgeted variable manufacturing overhead is $5.00 per direct labor-hour and the budgeted fixed manufacturing overhead is $2,295,000 per year.

The standard quantity of materials is 4 pounds per unit and the standard cost is $10.50 per pound. The standard direct labor-hours per unit is 1.5 hours and the standard labor rate is $13.50 per hour.

The company planned to operate at a denominator activity level of 255,000 direct labor-hours and to produce 170,000 units of product during the most recent year. Actual activity and costs for the year were as follows:

Actual number of units produced		204,000
Actual direct labor-hours worked		331,500
Actual variable manufacturing overhead cost incurred	$	961,350
Actual fixed manufacturing overhead cost incurred	$	2,652,000

Required:

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

2. Prepare a standard cost card for the companys product.

3a. Compute the standard direct labor-hours allowed for the years production.

3b. Complete the following Manufacturing Overhead T-account for the year.

4. Determine the reason for the underapplied or overapplied overhead from (3) above by computing the variable overhead rate and efficiency variances and the fixed overhead budget and volume variances.

Compute the predetermined overhead rate for the year. Break the rate down into variable and fixed elements. (Round your answers to 2 decimal places.)

Predetermined overhead rate		per DLH
Variable rate		per DLH
Fixed rate		per DLH

Prepare a standard cost card for the companys product. (Round your answers to 2 decimal places.)

Direct materials		pounds at		per pound
Direct labor		DLHs at		per DLH
Variable overhead		DLHs at		per DLH
Fixed overhead		DLHs at		per DLH
Standard cost per unit

Compute the standard direct labor-hours allowed for the years production.

	Standard direct labor hours

Complete the following Manufacturing Overhead T-account for the year.

Manufacturing Overhead

Determine the reason for the underapplied or overapplied overhead from (3) above by computing the variable overhead rate 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). Input all amounts as positive values.)

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Variable overhead rate variance
Variable overhead efficiency variance
Fixed overhead budget variance
Fixed overhead volume variance