Harris Fabrics computes its plantwide predetermined overhead rate annually on the basis of direct labor hours. At the beginning of the year, it was estimated that 40,000 direct labor hours would be required for the period’s estimated level of production. The company also estimated $507,000 of fixed manufacturing overhead cost for the coming period and variable manufacturing overhead of $2 per direct labor hour. Harris’s actual manufacturing overhead cost for the year was $663,188 and its actual total direct labor was 40,500 hours.
Compute the company’s plant-wide predetermined overhead rate for the year.
Webber Fabricating estimated the following annual hours and costs.
| Expected annual direct labor hours | 40,000 |
| Expected annual direct labor cost | $625,000 |
| Expected machine hours | 20,000 |
| Expected material cost for the year | $800,000 |
| Expected manufacturing overhead | $1,000,000 |
Calculate predetermined overhead allocation rates using each of the four possible allocation bases provided.
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