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Predetermine overhead rate = Estimated fixed manufacturing overhead / Estimated direct labor hours + Variable manufacturing overhead per direct labor hour.
Estimated fixed manufacturing Overhead = $ 515,000
Estimated direct labor hours = 33,000
Variable manufacturing overhead per direct labor = $ 3.00
Computation :
POHR =$ 515,000/33,000 + $ 3.00
POHR = $ 15.61 + $ 3.00
POHR = 18.61 per direct labor hours
Fixed Manufacturing Overhead = $515000
Direct-labor hour = 33000
Fixed Overhead rate = $515000 / 33000 direct labor hours = $15.61
Variable Overhead rate = $3
Company's Predetermined Overhead rate = Fixed Overhead rate + Variable Overhead rate = $15.61 + $3 = $18.61
Predetermined Overhead rate = $18.61
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Logan Products computes its predetermined overhead rate annually on the basis of direct labor-hours. At the...
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