Homework SourseThe company computes its predetermined overhead rate annuall
The company computes its predetermined overhead rate annually on the basis of direct labor-hours. At the beginning of the year, it estimated that 37,000 direct labor-hours would be required for the period’s estimated level of production. The company also estimated $539,000 of fixed manufacturing overhead expenses for the coming period and variable manufacturing overhead of $3.00 per direct labor-hour. The company\'s actual manufacturing overhead for the year was $724,409 and its actual total direct labor was 37,500 hours.
Compute the company\'s predetermined overhead rate for the year.
| The company computes its predetermined overhead rate annually on the basis of direct labor-hours. At the beginning of the year, it estimated that 37,000 direct labor-hours would be required for the period’s estimated level of production. The company also estimated $539,000 of fixed manufacturing overhead expenses for the coming period and variable manufacturing overhead of $3.00 per direct labor-hour. The company\'s actual manufacturing overhead for the year was $724,409 and its actual total direct labor was 37,500 hours. Compute the company\'s predetermined overhead rate for the year. |
Solution
predetermined overhead rate = total overhead (fixed + varaiable)/estimated labour hours ( 539000 + (37000*3))/37000 = 17.57 /direct labour hour
