FINANCIAL ACCOUNTING
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Author: Libby
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Compute the predetermined
![Tiger Furnishings produces two models of cabinets for home theater components, the Basic and the Dominator. The following data on operations and costs for March are provided:
| | Basic | Dominator | Total |
|------------------------|-------|-----------|--------|
| Units produced | 1,000 | 250 | 1,250 |
| Machine-hours | 4,500 | 2,500 | 7,000 |
| 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 | | | $175,000|
| Total costs | | | $288,750|
**Required:**
Compute the predetermined overhead rate assuming that Tiger Furnishings uses direct labor-hours to allocate overhead costs.
**Calculation:**
\[ \text{Predetermined overhead rate} = \frac{\text{Total manufacturing overhead costs}}{\text{Total direct labor-hours}} \]
\[ = \frac{175,000}{5,000} = \$35 \text{ per direct labor hour} \]](https://content.bartleby.com/qna-images/question/59e1e845-820e-4fe9-add9-1fc4529c88f2/1dbfa143-da36-481a-b0fb-b72b46fa3129/pf6n7uj_processed.jpeg)
Transcribed Image Text:Tiger Furnishings produces two models of cabinets for home theater components, the Basic and the Dominator. The following data on operations and costs for March are provided:
| | Basic | Dominator | Total |
|------------------------|-------|-----------|--------|
| Units produced | 1,000 | 250 | 1,250 |
| Machine-hours | 4,500 | 2,500 | 7,000 |
| 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 | | | $175,000|
| Total costs | | | $288,750|
**Required:**
Compute the predetermined overhead rate assuming that Tiger Furnishings uses direct labor-hours to allocate overhead costs.
**Calculation:**
\[ \text{Predetermined overhead rate} = \frac{\text{Total manufacturing overhead costs}}{\text{Total direct labor-hours}} \]
\[ = \frac{175,000}{5,000} = \$35 \text{ per direct labor hour} \]
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