Question

Henkes Corporation bases its predetermined overhead rate on the estimated labor-hours for the upcoming year. At the beginning of the most recently completed year, the company estimated the labor-hours for the upcoming year at 61,000 labor-hours. The estimated variable manufacturing overhead was $11.00 per labor-hour and the estimated total fixed manufacturing overhead was $1.159,000. The actual labor-hours for the year turned out to be 64.600 labor-hours. Required: Compute the company's predetermined overhead rate for the recently completed year. (Round your answer to 2 decimal places.) Predetermined overhead per labor-hour

Answer 1

Ans.	Predetermined overhead rate = Total Estimated overhead cost / Estimated labor hours
		$1,830,000 / 61,000
		$30.00	per labor - hour
	*Calculations:
	*Variable manufacturing overhead = Variable manufacturing overhead per labor hour * Budgted labor hours
		$11 * 61,000
		$671,000
	*Total estimated overhead cost = Variable manufacturing overhead + Fixed manufacturing overhead
		$671,000 + $1,159,000
		$1,830,000
	*Actual labor hours are used to calculate the overhead cost assigned.