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Harris Fabrics computes its predetermined overhead rate annually on the basis of direct labor hours. At the beginning of the year it estimated that its total manufacturing overhead would be $134,000 and the total direct labor would be 20,000 hours. Its actual total manufacturing overhead for the year was $ 123,900 and its actual total direct labor was 21,000 hours.
Compute the Company's predetermined over rate for the year?

Respuesta :

Answer: $6.70 per direct labor hour

Explanation:

Given that,

Estimated total manufacturing overhead = $134,000

Estimated total direct labor = 20,000 hours

Actual total manufacturing overhead for the year = $ 123,900

Actual total direct labor = 21,000 hours

Predetermined over rate for the year = [tex]\frac{Estimated\ manufacturing\ overhead}{Estimated\ direct\ labor\ hours}[/tex]

                                                              = [tex]\frac{134,000}{20,000}[/tex]

                                                              = $6.70 per direct labor hour

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