Exercise 2-1 Compute a Predetermined Overhead Rate [LO2-1] 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 34,000 direct labor-hours would be required for the period's estimated level of production. The company also estimated $580,000 of fixed manufacturing overhead cost for the coming period and variable manufacturing overhead of $3.00 per direct labor-hour. Harris's actual manufacturing overhead cost for the year was $743,779 and its actual total direct labor was 34,500 hours. Required: Compute the company's plantwide predetermined overhead rate for the year. (Round your answer to 2 decimal places.)
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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![Exercise 2-1 Compute a Predetermined Overhead Rate [LO2-1]
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 34,000 direct labor-hours would be required for the period's estimated level of
production. The company also estimated $580,000 of fixed manufacturing overhead cost for the coming period and
variable manufacturing overhead of $3.00 per direct labor-hour. Harris's actual manufacturing overhead cost for the year
was $743,779 and its actual total direct labor was 34,500 hours.
Required:
Compute the company's plantwide predetermined overhead rate for the year. (Round your answer to 2 decimal places.)
Predetermined overhead rate
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