Henkes Corporation bases its predetermined overhead rate on the estimated labor-

Question

Henkes Corporation bases its predetermined overhead rate on the estimated labor-hours for the upcoming year. At the beginning of the most recently completed year, the company estimated the labor-hours for the upcoming year at 80,000 labor-hours. The estimated variable manufacturing overhead was $10.70 per labor-hour and the estimated total fixed manufacturing overhead was $1,440,000 The actual labor-hours for the year turned out to be 84,000 labor-hours Required: Compute the company's predetermined overhead rate for the recently completed year. (Round your answer to 2 decimal places.) Predetermined overhead rate per labor-hour

Explanation / Answer

Predetermined OH rate = ( 1440000 / 80000 lab. hours ) + $ 10.70

$ 28.70 per labour hour

Predetermined OH rate is calculated using budgeted figures.

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