Question: EXERCISE 4-1 Compute the Predetermined Overhead Rate (104-1)

Logan Products computes its predetermined overhead rate annually on the basis of direct labor hours. At the beginning of the year, it estimated that 40,000 direct labor-hours would be required for the period’s estimated level of production, The company also estimated $466,000 of fixed manufacturing overhead expenses for the coming period and variable manufacturing overhead of $3.00 per direct labor-hour. Logan’s actual manufacturing overhead for the year was $713,400 and its actual total direct labor was 41,000 hours.

Required:

Compute the company’s predetermined overhead rate for the year.

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