Tiger Furnishings produces two models of cabinets for home theater components, t
ID: 2340737 • Letter: T
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: Total Units produced Machine-hours Direct labor-hours Direct materials costs Direct labor costs Manufacturing overhead costs 900 3,000 3,900 $ 8,700 64,600 Basic Dominator 400 2,500 2,900 $ 3,550 31,200 1,300 5,500 6,800 $ 12,250 95,800 229,976 $338,026 Total costs Required: Compute the predetermined overhead rate assuming that Tiger Furnishings uses direct labor costs to allocate overhead costs. (Round your answer to 2 decimal places.) Answer is complete but not entirely correct Predetermined overhead rate 240.0 % of direct labor costExplanation / Answer
Calcultion of Predetermined Overhead Rate
(A) Total Manufacturing Overheads
$ 229,976.00
(B) Total Direct Labor Cost
$ 95,800.00
(A/B) Predetermined Overhead Rate
$ 2.40
Answer Predetermined Overhead rate = $2.40 per each dollar of Labor cost
Predetermined Overhead rate is 240.06% of Direct labor Cost.
The answer already given is not correct only because of decimal error. The question asks answer in two decimal places so Correct Answer will be 240.06% Instead of 240.00%.
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Calcultion of Predetermined Overhead Rate