Question

Exercise 2-1 Compute a Predetermined Overhead Rate [LO2-1) Harris Fabrics computes its plantwide predetermined overhead rate annually on the basis of direct labor-hours. At the beginning of the year, it estimated that 41,000 direct labor-hours would be required for the period's estimated level of production. The company also estimated $533,000 of fixed manufacturing overhead cost for the coming period and variable manufacturing overhead of $3.00 per direct labor-hour. Harris's actual manufacturing overhead cost for the year was $734,550 and its actual total direct labor was 41,500 hours. Required Compute the company's plantwide predetermined overhead rate for the year. (Round your answer to 2 decimal places.) Predetermined overhead per DLH

Answer 1

Estimated total manufacturing overhead cost = Estimated fixed manufacturing overhead + Estimated variable manufacturing overhead

Estimated total manufacturing overhead cost = $533,000 + ($3.00 per DLH × 41,000 DLHs)

Estimated total manufacturing overhead cost = $656,000

Predetermined overhead rate = Estimated total manufacturing overhead / Estimated total direct labor hours (DLHs)

Predetermined overhead rate = $656,000 / 41,000 DLHs

Predetermined overhead rate = $16.00 per DLH