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1 August, 02:19

Harris Fabrics computes its plantwide predetermined overhead rate annually on the basis of direct labor-hours. At the beginning of the year, it estimated that 34,000 direct labor-hours would be required for the period's estimated level of production. The company also estimated $543,000 of fixed manufacturing overhead cost for the coming period and variable manufacturing overhead of $2.00 per direct labor-hour. Harris's actual manufacturing overhead cost for the year was $678,635 and its actual total direct labor was 34,500 hours. Required: Compute the company's plantwide predetermined overhead rate for the year. (Round your answer to 2 decimal places.)

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  1. 1 August, 04:05
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    Overhead rate = 17.97

    Explanation:

    Giving the following information:

    It estimated that 34,000 direct labor-hours would be required for the period's estimated level of production.

    The company also estimated:

    Fixed manufacturing cost = $543,000

    Variable manufacturing cost = $2.00 per direct labor-hour.

    Harris's actual manufacturing overhead cost:

    Total = $678,635

    Actual total direct labor was 34,500 hours.

    Overhead rate: Estimated total overhead cost/Estimated total amount of the allocation base

    Overhead rate = (543000+2*34000) / 340000

    Overhead rate = 17.97
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