Homework SourseTiger Furnishings produces two models of cabinets for home t
Tiger Furnishings produces two models of cabinets for home theater components, the Basic and the Dominator. Data on operations and costs for March follow:
Required:
Compute the predetermined overhead rate assuming that Tiger Furnishings uses direct labor-hours to allocate overhead costs. (Round your answer to 2 decimal places.)
| Basic | Dominator | Total | ||||
| Units produced | 1,000 | 450 | 1,450 | |||
| Machine-hours | 4,700 | 2,400 | 7,100 | |||
| Direct labor-hours | 2,600 | 2,000 | 4,600 | |||
| Direct materials costs | $ | 11,700 | $ | 3,550 | $ | 15,250 |
| Direct labor costs | 63,900 | 33,100 | 97,000 | |||
| Manufacturing overhead costs | 158,700 | |||||
| Total costs | $ | 270,950 | ||||
| |
Solution
Predetermined overhead rate = $34.50 per direct labor hours
Predetermined overhead rate = Total Manufacturing costs / Total Direct Labor hours
= $158,700 / 4,600 Direct labor hours
= $34.50 per direct labor hour
