Connect x Homework chapter 2 Help Save Exit Submit Check my

Connect x Homework chapter 2 Help Save& Exit Submit Check my Exercise 2-1 Compute a Predetermined Overhead Rate [LO2-1 Harris Fabrics computes its plantwide predetermined overhead rabe annually on the basis of direct labor-hours. At the beginning of the yeat, it estimated that 39,000 direct labor-hours would be required for the period\'s estimated level of production. The company also estimated $559,000 of fixed manufacturing overhead cost for the coming period and variable manufacturing overhead of $4.00 per direct labor hour Harris\'s actual manufacturing overhead cost for the year wes $793,292 and its actual botal direct labor was 39,500 Required: Compute the company\'s plantwide predetermined overhead rate for the year. (Round your answer to 2 decimal places Pree 1of7 Next > 8 WE

Solution

Predetermined Overhead Rate = Total Estimated Overhead / Total Estimated Direct Labor Hours

=$ 715,000 / 39,000 Direct Labor Hours

= $ 18.33 per direct labor hour

Hence the correct answer is $ 18.33

Note :

1. Total Estimated Overhead = Estimated Total Fixed Overhead + Estimated Total Variable Overhead

=Estimated Total Fixed Overhead + (Estimated Variable Overhead Per Direct Labor Hour * Total Direct Labor Hours)

= $ 559,000 + ($4 * 39,000 Direct Labor Hours)

= $ 715,000