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13 March, 05:31

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 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. Harris'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. (Round your answer to 2 decimal places.)

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  1. 13 March, 06:00
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    Predetermined overhead rate = $6.7

    Explanation:

    Giving the following information:

    Estimated that 20,000 direct labor-hours.

    Estimated $94,000 of fixed manufacturing overhead cost.

    Variable manufacturing overhead of $2.00 per direct labor-hour.

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

    Predetermined overhead rate = estimated total manufacturing overhead costs / total amount of allocation base

    Predetermined overhead rate = (94000 + 2*20000) / 20000

    Predetermined overhead rate = $6.7
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