Question

Exercise 2-1 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 35,000 direct labor-hours would be required for the period’s estimated level of production. The company also estimated $555,000 of fixed manufacturing overhead cost for the coming period and variable manufacturing overhead of $2.00 per direct labor-hour. Harris’s actual manufacturing overhead cost for the year was $692,504 and its actual total direct labor was 35,500 hours.

Required:

Compute the company’s plantwide predetermined overhead rate for the year. (Round your answer to 2 decimal places.)

Answer 1