E connect Nd Exam Harnis Fabries computes its predetermined overhead rate annual

Question

E connect Nd Exam Harnis Fabries computes its predetermined overhead rate annualy on the basis of direct labor hours. At the beginning of the year, it estimated that 35,000 drect labor-hours would be required for the penod's estimated level of production. The company also estimated $577 000 of fixed manufacturing overhead expenses for the coming penod and vaniable manufacturing overhead of $4.00 per direct labor-hour urss actual manufactunng ?verhead for the year was S784043 and its actual total direct labor was 35,500 hours Required: Compute the company's prodstamined overhoad cato for the year IRound your answer to 2 decimal places) per DLH

Explanation / Answer

Here

Estimated manufacturing overhead = fixed manufacturing overhead +

Variable manufacturing overhead

= $ 577000 + $ 4 × 35000 direct labour hours

= $ 717000

TO CALCULATE PREDETERMINED RATE ON BASIS OF DIRECT LABOUR HOURS

Predetermined overhead rate = estimated manufacturing overhead / estimated direct labour hours

. Rate = $717000/ 35000

= $ 20.49 per direct labour hours

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