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 34,000 direct labor-hours would be required for the period's estimated level of production. The company also estimated $594,000 of fixed manufacturing overhead expenses for the coming period and variable manufacturing overhead of $2.00 per direct labor-hour. Logan's actual manufacturing overhead for the year was $728,660 and its actual total direct labor was 34,500 hours:

Compute the company's predetermined overhead rate for the year

Explanation / Answer

Logan Products Predetermined OH rate calculation Details Amt a Estimated Fixed manufacturing Overhead for the year $        594,000.00 b Direct Labor hr estimated for the year                    34,000 Hrs c Predtermined Fixed OH rate per direct labor hr =a/b= $                  17.47 per DLH d Variable Manufacturing OH per Direct labor hour $                     2.00 per DLH e Predetermined OH rate per Direct labor Hr = c+d=                       19.47 per DLH

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