EXERCISE 2–1 Compute a Predetermined Overhead Rate LO2–1 Harris Fabrics computes its plantwide predetermined overhead rate annually on the basis of direct labor-hours. At the beginning of the year, it estimated that 20,000 direct labor-hours would be required for the period’s estimated level of production. The company also estimated $94,000 of fixed manufacturing overhead cost for the coming period and variable manufacturing overhead of $2.00 per direct labor-hour. Harris’s actual direct labor was 21,000 hours.
Required:
Compute the company’s plantwide predetermined overhead rate for the year.