Question

Homework 2 Job Order Costing You are to complete this assignment by the time class starts on the due date (indicated in the syllabus or during class). You are free to use resources or talk with classmates, but all work turned in must be your own. You may type or write/scan and upload to Blackboard, but make sure that I can read everything written down. It is your responsibility to make sure that the correct images have been uploaded. 1) Harris Fabrics computes its predetermined overhead rate annually on the basis of direct labor- hours. At the beginning of the year, it estimated that 20,000 direct labor-hours would be required for the period's estimated level of production. The company also estimated $94,000 of fixed manufacturing overhead and variable manufacturing overhead of $2.00 per labor-hour for the upcoming year. At the end of the year, Harris incurred $123,900 in actual manufacturing overhead costs and actual total direct labor was 21,000 hours. a. What is Harris Fabrics' predetermined overhead rate for the year? b. How much was total applied manufacturing overhead costs for Harris Fabrics during the year?

Answer 1

a.

Estimated fixed manufacturing overhead = $ 94,000

Estimated variable manufacturing overhead = 2 * 20,000 = $ 40,000

Estimated total manufacturing overhead cost = 94,000 +40,000 = 134,000

Pre-determined overhead is computed as = Estimated total manufacturing overhead cost/Total direct labor hours                = 134,000/20,000   = $ 6.7

b.

Number of direct labor hours during the current period = 21000 hours

manufacturing overheads applied to units = Predetermined rate * labor hours

                                                                      = 6.7 * 21000

                                                                       = $ 140,700