## Thursday, 10 April 2014

### 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 \$576,000 and the total direct labor would be 30,000 hours. Its actual total manufacturing overhead for the year was \$740,000 and its actual total direct labor was 31,000 hours.

Brief Exercise 2-3 Compute the Predetermined Overhead Rate [LO3]
 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 \$576,000 and the total direct labor would be 30,000 hours. Its actual total manufacturing overhead for the year was \$740,000 and its actual total direct labor was 31,000 hours.

 Required: Compute the company's predetermined overhead rate for the year. (Round your answer to 2 decimal places. Omit the "\$" sign in your response.)

 Predetermined overhead rate \$ per DLH

Explanation:
 The predetermined overhead rate is computed as follows:

 Estimated total manufacturing overhead \$576,000 ÷ Estimated total direct labor hours (DLHs) 30,000 DLHs = Predetermined overhead rate \$19.20 per DLH