Question 1 [14 marks, 35 minutes! Maharn Company produces a single product, bags 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 labourhours. The company's condensed exible budget for manufacturing overhead is given below: Cost Direct Labour-Hours Formula Overhead costs (1361' DLH} 12.000 15.000 18,0 0 0 Variable manufacturing $24,000 $30,000 $36,000 overhead cost Fixed manufacturing 75,000 75,000 75,000 overhead cost Total manufacturing $99,000 $105,000 $1 1 1,000 overhead cost Each backpack requires 2 metres of direct material that has a standard cost of $1.50 per metre. The product requires 1.6 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 $18,000 direct labourhours and to 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 17,000 Actual] variable manufacturing overhead cost incurred $30,500 Actual xed manufacturing overhead cost incurred $75,500 Required: 1. Compute the predetermined overhead rate for the year. Break the rate down into variable and xed components 2. a. Compute the standard direct labour-hours allowed for the year's production. b. Complete the over/under applied manufacturing overhead. 3. Determine the reason for the underapplied or overapplied overhead from (2) above by computing the variable overhead spending and efciency variances and the xed overhead budget and volume variances