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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. Variable manufacturing overhead should be $3.00 per standard direct labor-hour and fixed manufacturing overhead should be $735,000 per year.

The companys product requires 4 pounds of material that has a standard cost of $5.50 per pound and 1.5 hours of direct labor time that has a standard rate of $12.50 per hour.

The company planned to operate at a denominator activity level of 105,000 direct labor-hours and to produce 70,000 units of product during the most recent year. Actual activity and costs for the year were as follows:

Number of units produced	84,000
Actual direct labor-hours worked	136,500
Actual variable manufacturing overhead cost incurred	$259,350
Actual fixed manufacturing overhead cost incurred	$750,750

Required:

1. Compute the predetermined overhead rate for the year. Break the rate down into variable and fixed elements. (Round your answers to 2 decimal places.)

	Predetermined overhead rate per DLH Variable rate per DLH Fixed rate per DLH

2. Prepare a standard cost card for the companys product. (Round your answers to 2 decimal places.)

	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.

	Standard direct labor hours

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

	Manufacturing Overhead Actual cost or Applied Costs Actual cost or Applied Costs Actual cost or Applied Costs Actual cost or Applied Costs Actual cost or Applied Costs Actual cost or Applied Costs Overapplied overhead or underapplied overhead Overapplied overhead or underapplied overhead

4. Determine the reason for the underapplied or overapplied overhead from (3) above 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).)

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

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