Harris Fabrics computes its predetermined overhead rate annually on the basis of direct labor-hours. At the beginning of the year, it estimated that 41,000 direct labor-hours would be required for the period’s estimated level of production. The company also estimated $568,000 of fixed manufacturing overhead expenses for the coming period and variable manufacturing overhead of $3.00 per direct labor-hour. Harris’s actual manufacturing overhead for the year was $763,752 and its actual total direct labor was 41,500 hours. Compute the company’s predetermined overhead rate for the year.
[SOLVED] Question & Answer: Harris Fabrics computes its predetermined overhead rate annually on the basis of direct labor-hours
Expert Answer
Fixed ovehead/estimated labour hour=($568000/41000)=$13.854(Approx)
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[SOLVED] Question & Answer: Harris Fabrics computes its predetermined overhead rate annually on the basis of direct labor-hours
From $8/Page
Add:variable overhead rate =$3
Hence company’s predetermined overhead rate for the year=$16.85(Approx).
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