Harris Fabrics computes its 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 $599,000 of fixed manufacturing overhead expenses for the coming period and variable manufacturing overhead of $3.00 per direct labor-hour. Harris's actual manufacturing overhead for the year was $768,234 and its actual total direct labor was 34,500 hours.

Required:

Compute the company's predetermined overhead rate for the year. (Round your answer to 2 decimal places.)

Question

Business

Sarai Gallagher

12 November, 05:05

Harris Fabrics computes its 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 $599,000 of fixed manufacturing overhead expenses for the coming period and variable manufacturing overhead of $3.00 per direct labor-hour. Harris's actual manufacturing overhead for the year was $768,234 and its actual total direct labor was 34,500 hours.

Required:

Compute the company's predetermined overhead rate for the year. (Round your answer to 2 decimal places.)

+4

Answers (1)

Know the Answer?

Nicholson · Answer 1

= $20.62

Explanation:

Given that

overhead expenses = $599,000

direct labor hours = 34,000

overhead direct labor = 3

The computation of predetermined overhead rate is given below : -

= (Estimated manufacturing overhead expenses : direct labor hours) + variable manufacturing overhead direct labor

= ($599,000 : 34,000) + 3

= $17.62 + 3

= $20.62