Predetermined Overhead Rates
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
|
1,000
|
250
|
1,250
|
|
Machine-hours
|
4,000
|
2,000
|
6,000
|
|
Direct labor-hours
|
3,000
|
2,000
|
5,000
|
|
Direct materials costs
|
$10,000
|
$ 3,750
|
$ 13,750
|
|
Direct labor costs
|
64,500
|
35,500
|
100,000
|
|
Manufacturing overhead costs
|
|
|
174,100
|
|
Total costs
|
|
|
$287,850
|
Required
Compute the predetermined overhead rate assuming that Tiger Furnishings uses direct labor costs to allocate overhead costs.