connec All applicable exercises are available with McGraw-Hill\'s Connect Accoun
ID: 2610098 • Letter: C
Question
connec All applicable exercises are available with McGraw-Hill's Connect Accounting. EXERCISE 3-1 Compute the Predetermined Overhead Rate [LO3-1] Haris 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 ul facturing overhead expenses for the coming period and variable manufacturing overhead of $2.00 per direct labor-hour. Harris's actual manufacturing overhead for the year was $123,900 and its actual total direct labor was 21,000 hours. Required: Compute the company's predetermined overhead rate for the year.Explanation / Answer
Pred etermined overhead rate = Fixed overhead rate + variable overhead rate
Fixed overhead rate = 94000 / 20000 = 4.70
Pred etermined overhead rate = 4.70 + 2
= 6.70 per Direct labor hour
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