Harris Fabrics computes its predetermined overhead rate annually on the basis of

Question

Harris Fabrics computes its predetermined overhead rate annually on the basis of direct labor-hours. At the beginning of the year, it estimated that 36,000 direct labor-hours would be required for the period’s estimated level of production. The company also estimated $576,000 of fixed manufacturing overhead expenses for the coming period and variable manufacturing overhead of $4.00 per direct labor-hour. Harris's actual manufacturing overhead for the year was $786,575 and its actual total direct labor was 36,500 hours. Required: Compute the company's predetermined overhead rate for the year. (Round your answer to 2 decimal places.)

Predetermined overhead rate per DHL

Explanation / Answer

Estimated fixed manufacturing overhead $ 576,000 Estimated direct labor hours        36,000 Estimated fixed manufacturing overhead rate per hour ($576,000/36,000) $            16 Add: Variable manufacturing overhead rate per hour $               4 Predetermined overhead rate per hour $            20

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