Problem $10$A$-8($Algo$)$ Applying Overhead; Overhead Variances $[$LO$10-3,$ LO$10-4]$

Lane Company manufactures a single product requiring a great deal of hand labor. Overhead cost is applied based on standard direct labor$-$hours. The budgeted variable manufacturing overhead is $$2\mathrm{.}80$ per direct labor$-$hour and the budgeted fixed manufacturing overhead is $$612,000$ per year.

The standard quantity of materials is $4$ pounds per unit and the standard cost is $$5\mathrm{.}00$ per pound. The standard direct labor$-$hours per unit is $1\mathrm{.}5$ hours and the standard labor rate is $$12\mathrm{.}40$ per hour.

The company planned to operate at a denominator activity level of $90,000$ direct labor$-$hours and to produce $60,000$ units during the most recent year. Actual activity and costs for the year were as follows:

Actual number of units produced $72,000$

Actual direct labor$-$hours worked $117,000$

Actual variable manufacturing overhead cost incurred $ $210,600$

Actual fixed manufacturing overhead cost incurred $ $643,500$

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 company$$s product.

$3$a$.$ Compute the standard direct labor$-$hours allowed for the year$$s production.

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

$4.$ Determine the reason for any underapplied or overapplied overhead for the year by computing the variable overhead rate and efficiency variances and the fixed overhead budget and volume variances.