Problem 10A-8 Applying Overhead; Overhead Variances [LO10-3, LO10-4] 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 $4.20 per direct labor-hour and the budgeted fixed manufacturing overhead is $1,599,000 per year. The standard quantity of materials is 4 pounds per unit and the standard cost is $8.50 per pound. The standard direct labor-hours per unit is 1.5 hours and the standard labor rate is $13.10 per hour The company planned to operate at a denominator activity level of 195,000 direct labor-hours and to produce 130,000 units of product during the most recent year. Actual activity and costs for the year were as follows: Actual number of units produced Actual direct labor-hours worked Actual variable manufacturing overhead cost incurred 633,750 Actual fixed manufacturing overhead cost incurred 156,000 253,500 $1,774,500