Concept explainers
Applying
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 $2 per direct labor-hour and the budgeted fixed manufacturing overhead is $480,000 per year.
The standard quantity of materials is 3 pounds per unit and the
Required:
- Compute the predetermined overhead rate for the year Break the rate down into variable and fixed elements.
- Prepare a standard cost card for the company’s product; show the details for all
manufacturing costs on your standard cost card. - Do the following:
- Compute the standard direct labor-hours allowed for the year’s production.
- Complete the following Manufacturing Overhead T-account for the year:
- 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.
- Suppose the company had chosen 65,000 direct labor-hours as the denominator activity rather than 60,000 hours. State which, if any, of the variances computed in (4) above would have changed, and explain how the variance(s) would have changed. No computations are necessary.
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Loose Leaf For Managerial Accounting for Managers
- The weighted average contribution margin is?arrow_forwardUse the information provided by iLembe Enterprises to answer the following questions independently. The expanded contribution margin model must be used to answer questions 3.3 to 3.5. 3.1 Use the contribution margin ratio to calculate the break-even value. 3.2 Determine the selling price per unit (expressed to the nearest cent) that will enable iLembe Enterprises to break even. 3.3 Calculate the sales volume required to achieve an operating profit of R2 001 000. 3.4 Calculate the total Contribution Margin and Operating Profit/Loss if the sales price drops by 10%. 3.5 The management of iLembe Enterprises is considering an increase of R100 000 in the advertising expenditure with the expectation that the sales volume will increase by 1 000 units. Will the profitability improve? Motivate your answer with the relevant calculationsarrow_forwardGive me ansarrow_forward
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