Homework SourseHarris Fabrics computes its predetermined overhead rate annu
Harris Fabrics computes its predetermined overhead rate annually on the basis of direct labor-hours. At the beginning of the year, it estimated that 38,000 direct labor-hours would be required for the period’s estimated level of production. The company also estimated $542,000 of fixed manufacturing overhead expenses for the coming period and variable manufacturing overhead of $2.00 per direct labor-hour. Harris\'s actual manufacturing overhead for the year was $691,582 and its actual total direct labor was 38,500 hours.
Compute the company\'s predetermined overhead rate for the year.
| Harris Fabrics computes its predetermined overhead rate annually on the basis of direct labor-hours. At the beginning of the year, it estimated that 38,000 direct labor-hours would be required for the period’s estimated level of production. The company also estimated $542,000 of fixed manufacturing overhead expenses for the coming period and variable manufacturing overhead of $2.00 per direct labor-hour. Harris\'s actual manufacturing overhead for the year was $691,582 and its actual total direct labor was 38,500 hours. |
Solution
Total overheads predetermined=Variable overhead+Fixed overheads
which is equal to
=(2*38000)+$542000=$618000
Hence company\'s predetermined overhead rate for the year=($618000/38000)
which is equal to
=$16.26 per direct labor hour.
