Problem 10A-9 (Algo) Applying Overhead; Overhead Variances [LO10-3, L010-4] Baird Company makes classic Polish sausage. The company uses a standard cost system to help control costs. Manufacturing overhead is applied to production on the basis of standard direct labor-hours. According to the company's planning budget, the following manufacturing overhead costs should be incurred at an activity level of 26,000 labor-hours (the denominator activity level): Variable manufacturing overhead cost Fixed manufacturing overhead cost Total manufacturing overhead cost $ 123,500 175,500 $ 299,000 During the most recent year, the following operating results were recorded: Activity: Actual labor-hours worked Standard labor-hours allowed for the actual output Cost: Actual variable manufacturing overhead cost incurred Actual fixed manufacturing overhead cost incurred 23,000 24,000 $142,600 $ 156,000 At the end of the year, the company's Manufacturing Overhead account contained the following data: Manufacturing Overhead Debit Credit Actual 298,600 Applied 276,000 22,600 Management would like to determine the cause of the $22,600 underapplied overhead. Required: 1. Compute the predetermined overhead rate. Break the rate down into variable and fixed cost elements. 2. Show how the $276,000 Applied figure in the Manufacturing Overhead account was computed. 3. Break down the $22,600 underapplied overhead into four components: (1) variable overhead rate variance, (2) variable overhead afficiency variance 3 fived overhead hurdnet variance and (4) fivert overhead unlume variance