Question

Henkes 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 80,000 labor-hours. The estimated variable manufacturing overhead was $10.70 per labor-hour and the estimated total fixed manufacturing overhead was $1,440,000 The actual labor-hours for the year turned out to be 84,000 labor-hours
Required: Compute the company's predetermined overhead rate for the recently completed year. (Round your answer to 2 decimal places.)

Answer 1

Answer:

Predetermined Overhead rate is $28.7 per unit

Explanation:

Estimated Manufacturing overhead = Estimated variable manufacturing overhead + estimated total fixed manufacturing overhead

Estimated Manufacturing overhead = ( 80,000 x $10.70 ) + $1,440,000

Estimated Manufacturing overhead = $856,000 + $1,440,000

Estimated Manufacturing overhead = $2,296,000

Estimated Labor hours = 80,000 hours

Predetermined Overhead rate = Estimated Manufacturing overhead / Estimated Labor hours

Predetermined Overhead rate = 2,296,000 / 80,000

Predetermined Overhead rate = $28.7 per unit