Question

Harris fabrics computes its predetermined overhead rate annually on the basis of direct labor-hours. at the beginning of the year, it estimated that 20,000 direct labor-hours would be required for the period’s estimated level of production. the company also estimated $94,000 of fixed manufacturing overhead expenses for the coming period and variable manufacturing overhead of $2.00 per direct labor-hour. harris';s actual manufacturing overhead for the year was $123,900 and its actual total direct labor was 21,000 hours.

Answer 1

predetermined overhead= total estimated overhead cost(machine hours , direct labor) /estimated allocation base

predetermined overhead= $534,000 +(31000 DLH x $3)

predetermined overhead= $20.23/DLH

hope this helps

Answer 2

The required predetermined overhead rate annually on the basis of direct labor-hours is 6.7.

Given that ,

Estimated that 20,000 direct labor-hours.

Estimated $94,000 of fixed manufacturing overhead expenses .

Variable manufacturing overhead of $2.00 per direct labor-hour.

Harris's actual manufacturing overhead for the year was $123,900 and its actual total direct labor was 21,000 hours.

We have to find,

Harris fabrics computes its predetermined overhead rate annually on the basis of direct labor-hours.

Predetermined overhead rate = estimated total manufacturing overhead costs ÷ total amount of allocation base

Predetermined overhead rate = $\frac{94000 + 2 (20000)}{20000}$

Predetermined overhead rate = $6.7

Hence, The required predetermined overhead rate annually on the basis of direct labor-hours is 6.7.

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