exercise 2-1 (static) compute a predetermined overhead rate lo2-1 harris fabrics computes its plantwide…

exercise 2-1 (static) compute a predetermined overhead rate lo2-1 harris fabrics computes its plantwide 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 periods estimated level of production. the company also estimated $94,000 of fixed manufacturing overhead cost for the coming period and variable manufacturing overhead of $2.00 per direct labor - hour. harriss actual manufacturing overhead cost for the year was $123,900 and its actual total direct labor was 21,000 hours. required: compute the companys plantwide predetermined overhead rate for the year. (round your answer to 2 decimal places.) predetermined overhead rate per dlh

exercise 2-1 (static) compute a predetermined overhead rate lo2-1 harris fabrics computes its plantwide 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 periods estimated level of production. the company also estimated $94,000 of fixed manufacturing overhead cost for the coming period and variable manufacturing overhead of $2.00 per direct labor - hour. harriss actual manufacturing overhead cost for the year was $123,900 and its actual total direct labor was 21,000 hours. required: compute the companys plantwide predetermined overhead rate for the year. (round your answer to 2 decimal places.) predetermined overhead rate per dlh

Answer

Explanation:

Step1: Calculate total estimated manufacturing overhead

The total estimated manufacturing overhead is the sum of fixed and variable overhead. Fixed overhead is $94,000 and variable overhead is calculated as variable rate per direct - labor hour times estimated direct - labor hours. Variable rate per direct - labor hour is $2.00 and estimated direct - labor hours is 20,000. So variable overhead is $2.00×20,000 = $40,000. Total estimated manufacturing overhead = $94,000 + $40,000=$134,000.

Step2: Calculate predetermined overhead rate

The predetermined overhead rate is calculated by dividing the total estimated manufacturing overhead by the estimated direct - labor hours. So the rate is $\frac{134000}{20000}=6.70$.

Answer:

$6.70$ per DLH