Question
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.
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 $5.40 per standard direct labor-hour and fixed manufacturing overhead should be $2,679,000 per year. The companys product requires 4 pounds of material that has a standard cost of $11.50 per pound and 1.5 hours of direct labor time that has a standard rate of $13.70 per hour. The company planned to operate at a denominator activity level of 285,000 direct labor-hours and to produce 190,000 units of product during the most recent year. Actual activity and costs for the year were as follows:
Number of units produced | 228,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Actual direct labor-hours worked | 370,500 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Actual variable manufacturing overhead cost incurred | $ 1,148,550 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Actual fixed manufacturing overhead cost incurred | $ 2,964,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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3b. | Complete the following Manufacturing Overhead T-account for the year:
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