Fundamentals of Cost Accounting 3rd Edition by William N. Lanen, Shannon W. Anderson, Michael Maher

Exercise 31

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-hours to allocate overhead costs.