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. Variable manufacturing overhead should be $3.20 per standard direct labor-hour and fixed manufacturing overhead should be $864,000 per year.

The companys product requires 4 pounds of material that has a standard cost of $6.00 per pound and 1.5 hours of direct labor time that has a standard rate of $12.60 per hour.

The company planned to operate at a denominator activity level of 120,000 direct labor-hours and to produce 80,000 units of product during the most recent year. Actual activity and costs for the year were as follows:

Number of units produced	96,000
Actual direct labor-hours worked	156,000
Actual variable manufacturing overhead cost incurred	$312,000
Actual fixed manufacturing overhead cost incurred	$936,000

Required:

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

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

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. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)