Logan Products computes its predetermined overhead rate annually on the basis of

Question

Logan Products computes its predetermined overhead rate annually on the basis of direct labor-hours. At the beginning of the year, it estimated that 43,000 direct labor-hours would be required for the period's estimated level of production. The company also estimated S534,000 of fixed manufacturing overhead expenses for the coming period and variable manufacturing overhead of $3.00 per direct labor-hour. Logan's actual manufacturing overhead for the year was $742,484 and its actual total direct labor was 43,500 hours. Required Compute the company's predetermined overhead rate for the year. (Round your answer to 2 decimal places.) ned ove per DLH

Explanation / Answer

Total estimated variable manufacturing overhead=$3*43000 labor hours

=$129000

Hence total estimated overhead=Total estimated variable manufacturing overhead+Total estimated fixed manufacturing overhead

=$129000+$534000

=$663000

Hence predetermined overhead rate=total estimated overhead/total estimated direct labor hours

=$663000/43000

which is equal to

=$15.42 per DLH.

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