12:014 LTE ezto.mheducation.com E connect help Logan Products computes its prede

Question

12:014 LTE ezto.mheducation.com E connect help Logan Products computes its predetermined overhead rate annualy on the basis of direct labor-hours. At the beginning of the year, it estimated hat 40,000 direct labor-hours would be required for the period's estimated level of production The company also estimated S466,000 of fixed manufacturing overhead expenses for the coming period and variable manufacturing overhead of $3.00 per direct labor hour Logan's actual manufacturing overhead for the year was $713400 and its actual total direct labor was 41,000 hours Required: Compute the company's predetermined overhead to 2 decimal places. for year (Round your answer

Explanation / Answer

Calculation of Pre-determined Overhead Rate:

Y = a + bX

Y= $466,000 + ($3.00)(40,000 direct labor-hours)

Estimated fixed manufacturing overhead = $466,000

Estimated variable manufacturing overhead = 120,000 ($3.00 X 40,000)

Estimated total manufacturing overhead cost = $466,000 + 120,000= $586,000

Predetermined overhead rate = estimated total manufacturing overhead / estimated total direct labor-hours

= 586,000/40,000

= 14.65

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