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 34,000 direct labor-hours would be required for the period's estimated level of production. The company also estimated $543,000 of fixed manufacturing overhead cost for the coming period and variable manufacturing overhead of $2.00 per direct labor-hour. Harris's actual manufacturing overhead cost for the year was $678,635 and its actual total direct labor was 34,500 hours. Required: Compute the company's plantwide predetermined overhead rate for the year. (Round your answer to 2 decimal places.)

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Business

Karsyn

21 May, 10:08

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 34,000 direct labor-hours would be required for the period's estimated level of production. The company also estimated $543,000 of fixed manufacturing overhead cost for the coming period and variable manufacturing overhead of $2.00 per direct labor-hour. Harris's actual manufacturing overhead cost for the year was $678,635 and its actual total direct labor was 34,500 hours. Required: Compute the company's plantwide predetermined overhead rate for the year. (Round your answer to 2 decimal places.)

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Emily Carlson · Answer 1

Overhead rate = 17.97

Explanation:

Giving the following information:

It estimated that 34,000 direct labor-hours would be required for the period's estimated level of production.

The company also estimated:

Fixed manufacturing cost = $543,000

Variable manufacturing cost = $2.00 per direct labor-hour.

Harris's actual manufacturing overhead cost:

Total = $678,635

Actual total direct labor was 34,500 hours.

Overhead rate: Estimated total overhead cost/Estimated total amount of the allocation base

Overhead rate = (543000+2*34000) / 340000

Overhead rate = 17.97