Hsu Corporation bases its predetermined overhead rate on the estimated labor-hours for the upcoming year. At the beginning of the most recently completed year, the company estimated the labor-hours for the upcoming year at 32,000 labor-hours. The estimated variable manufacturing overhead was $7.17 per labor-hour and the estimated total fixed manufacturing overhead was $584,320. The actual labor-hours for the year turned out to be 33,300 labor-hours.Required:Compute the company's predetermined overhead rate for the recently completed year.
What will be an ideal response?
Estimated total manufacturing overhead = $584,320 + ($7.17 per machine-hour × 32,000 machine-hours) = $813,760
Predetermined overhead rate = $813,760 ÷ 32,000 machine-hours = $25.43 per labor-hour
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What will be an ideal response?
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