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Exercise - Compute the Predetermined Overhead Rate
Logan Products computes its predetermined overhead rate annually on the basis of direct labor hours. At the beginning of the year, it estimated that 28,000 direct labor-hours would be required for the period's estimated level of production. The company also estimated $578,000 of fixed manufacturing overhead expenses for the coming period and variable manufacturing overhead of $4.00 per direct labor-hour. Logan's actual manufacturing overhead for the year was $749,346 and its actual total direct labor was 28,500 hours.
Required: Compute the company's predetermined overhead rate for the year.
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