Question

# Your company computes its plantwide predetermined overhead rate annually on the basis of direct labor-hours. At...

Your company 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 period's 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. Your company's actual manufacturing overhead cost for the year was \$123,900 and its actual total direct labor was 21,000 hours.

REQUIRED:  Compute the company's plantwide predetermined overhead rate for the year. Show your work. (Hint: There are 2 calculations required to arrive at the answer.)

 Fixed overhead rate per direct labor hour = Fixed overhead/Total direct labor hours = \$     94,000 / 20,000 = \$        4.70 Predetermined overhead rate = Fixed overhead per direct labor hour+Variable overhead per direct labor hour = \$        4.70 + \$      2.00 = \$        6.70 Thus,company's plantwide predetermined overhead rate for the year is \$ 6.70 per direct labor hour.

#### Earn Coins

Coins can be redeemed for fabulous gifts.