[LO4, LOS, LO6] 22 marks Ryder Company produces a single product, school backpacks made of a sturdy nylon fabric. The production of these bags requires a relatively large amount of labour time. Overhead cost is applied on the basis of standard direct labour-hours. The company's condensed flexible budget for manufacturing overhead is given below: Qverhead Costs Cost Formula (per DLH) % Variable manufacturing overhead cost 5 2 24000 30000 36000 Fixed manufacturing overhead cost 75,000 75,000 75,000 Total manufacturing overnead cost $99.000 105,000 $ 111,000 Each backpack requires 2 metres of direct material that has a standard cost of $1.50 per metre. The product requires 1.5 hours of direct labour time. The standard labour rate is $15 per hour During the year, the company had planned to operate at a denominator activity level of 15,000 direct labour-hours and fo produce 10,000 units of product. Actual activity and costs for the year were as follows. Number of units produced 11,000 Actual direct labour-hours worked 17500 Actual variable manufacturing overhead cost incurred 31500 Actual fixed manufacturing overhead cost incurred 76500 Required: 1. Compute the predetermined overhead rate for the year. Break the rate down into variable and fixed components. 6 marks 2. Do the following: a. Compute the standard direct labour-hours allowed for the year's production. 2 marks b. Complete the following manufacturing overhead T-account for the year: 3 marks 3. Determine the reason for the underapplied or overapplied overhead from requirement (2) above by computing the variable overhead spending 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).) 5 marks 4. If the company had chosen 18,000 direct labour-hours as the denominator activity rather than 15,000 hours, indicate which of the following variance given below would change. 6 marks