Question

Tiger Furnishings produces two models of cabinets for home theater components, the Basic and the Dominator. Data on operations and costs for March follow: Basic Dominator Total Units produced 1,100 500 1,600 Machine-hours 3,600 1,500 5,100 Direct labor-hours 2,900 1,200 4,100 Direct materials costs $ 8,100 $ 3,400 $ 11,500 Direct labor costs 67,300 34,100 101,400 Manufacturing overhead costs 141,860 Total costs $ 254,760 Required: Compute the predetermined overhead rate assuming that Tiger Furnishings uses direct labor-hours to allocate overhead costs.

Answer 1

Estimated manufacturing overhead rate= 141860/4100= $34.6 per direct labor hour

Step-by-step explanation:

Giving the following information:

The predetermined overhead rate uses direct labor-hours.

Direct labor hours:

Basic 2,900

Dominator 1,200

Total= 4100

Manufacturing overhead costs 141,860.

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Estimated manufacturing overhead rate= 141860/4100= $34.6 per direct labor hour