Question

Tiger Furnishings produces two models of cabinets for home theater components, the Basic and the Dominator. Data on operations and costs for March follow Units produced Machine-hours Direct labor-hours Direct materials costs Direct labor costs Manufacturing overhead costs Total costs Basic 1,000 3,600 2,200 $19,900 67,600 Dominator 400 2,700 1,200 $3,600 36,40 Total 1,400 6,300 3,400 $ 14,500 104,000 119,544 $238, 044 Required: Compute the predetermined overhead rate assuming that Tiger Furnishings uses direct labor costs to allocate overhead costs. (Round your answer to 2 decimal places.) Predetermined overhead rate % of direct labor cost

Answer 1

Predetermine overhead rate = Estimated manufacturing overhead cost / Total direct labor costs) * 100 ($119,544 / $104,000) * 100 114.95 % of direct labor cost