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 66,000 labor-hours. The estimated variable manufacturing overhead was $8.41 per labor-hour and the estimated total fixed manufacturing overhead was $1,533,180. The actual labor-hours for the year turned out to be 68,400 labor-hours.   Required: Compute the company's predetermined overhead rate for the recently completed year.

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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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 66,000 labor-hours. The estimated variable manufacturing overhead was $8.41 per labor-hour and the estimated total fixed manufacturing overhead was $1,533,180. The actual labor-hours for the year turned out to be 68,400 labor-hours.

 

Required:

Compute the company's predetermined overhead rate for the recently completed year.

Expert Solution
Step 1

Predetermined overhead rate is based on the estimated overhead cost and estimated direct labor hours.

Overhead cost is the total of variable and fixed overhead cost.

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