Tiger Furnishings produces two models of cabinets for home theater components, 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:

Required:

Compute the predetermined overhead rate assuming that Tiger Furnishings uses direct labor-hours to allocate overhead costs. (Round your answer to 2 decimal places.)

Basic Dominator Total Units produced 1,000 450 1,450 Machine-hours 4,700 2,400 7,100 Direct labor-hours 2,600 2,000 4,600 Direct materials costs $ 11,700 $ 3,550 $ 15,250 Direct labor costs 63,900 33,100 97,000 Manufacturing overhead costs 158,700 Total costs $ 270,950

Explanation / Answer

Predetermined overhead rate = $34.50 per direct labor hours

Predetermined overhead rate = Total Manufacturing costs / Total Direct Labor hours

= $158,700 / 4,600 Direct labor hours

= $34.50 per direct labor hour

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