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 Total Units produced 1,000 400 1,400 Machine-hours 4,100 2,400 6,500 Direct labor-hours 3,700 2,300 6,000 Direct materials costs $ 11,800 $ 3,300 $ 15,100 Direct labor costs 59,700 31,500 91,200 Manufacturing overhead costs 206,700 Total costs $ 313,000 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.)

Answer 1

Answer:

227% of Direct labor cost and $34.45 per direct labor hour

Explanation:

Pre-determined overhead rate:

$=\frac{Total\ overhead}{Direct\ labor\ cost}\times 100$

$=\frac{206,700}{91,200}\times 100$

= 2.27 × 100

= 227% of Direct labor cost

Pre-determined overhead rate:

$=\frac{Total\ overhead}{Direct\ labor\ hours}$

$=\frac{206,700}{6,000}$

= $34.45 per direct labor hour