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