Lane Company manufactures a single product and applies overhead cost to that product using standard direct labor-hours. The budgeted variable manufacturing overhead is $5.60 per direct labor-hour and the budgeted fixed manufacturing overhead is $2,880,000 per year.

The standard quantity of materials is 4 pounds per unit and the standard cost is $12.00 per pound. The standard direct labor-hours per unit is 1.5 hours and the standard labor rate is $13.80 per hour.

The company planned to operate at a denominator activity level of 300,000 direct labor-hours and to produce 200,000 units of product during the most recent year. Actual activity and costs for the year were as follows:

Actual number of units produced		240,000
Actual direct labor-hours worked		390,000
Actual variable manufacturing overhead cost incurred	$	1,248,000
Actual fixed manufacturing overhead cost incurred	$	3,120,000
1. Compute the predetermined overhead rate for the year. Break the rate down into variable and fixed elements Predetermined overhead rate per DLH Variable rate per DLH Fixed rate per DLH

2. Prepare a standard cost card for the companys product.

Direct materials pounds at per pound Direct labor DLHs at per DLH Variable overhead DLHs at per DLH Fixed overhead DLHs at per DLH Standard cost per unit

3a. Compute the standard direct labor-hours allowed for the years production.

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

Manufacturing Overhead

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.(Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

Variable overhead rate variance Variable overhead efficiency variance Fixed overhead budget variance Fixed overhead volume variance