Tiger Furnishings produces two models of cabinets for home theater components, t

Question

Tiger Furnishings produces two models of cabinets for home theater components, the Basic and the Dominator. Data on operations and costs for March follow Basic Dominator 400 3,400 1,800 1,300 Units produced 750 Direct labor-hours Direct materials costs Direct labor costs Manufacturing overhead costs 1.150 5,200 4.300 $8,100 3,450 11,550 67.200 34,40D 101,600 146.802 3,000 Total costs $259,952 Required Compute the predetermined overhead rate assuming that Tiger Furnishings uses direct labor costs to allocate overhead costs. (Round your answer to 2 decimal places.) % of direct labor cost )

Explanation / Answer

CALCULATION OF THE PREDETERMINED OVERHEAD RATE Predetermined Overhead rate = manufacturing overead costs / Direct labour costs Predetermined Overhead rate = $ 146,802 /$ 101,600 =                     1.4449 It means predetermined overhead rate is 1.4449 or 144.49% of direct labour cost Answer = 144.49% of direct labour cost

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