Harris Fabrics computes its predetermined overhead rate annually on the basis of direct

labor hours. At the beginning of the year it estimated that its total manufacturing overhead

would be $134,000 and the total direct labor would be (20,000 hours. Its actual totar

manufacturing overhead for the year was $123,900 and its actual total direct labor was

21,000 hours. (Marks 5)

Required:

Compute the company's predetermined overhead rate for the year. [3)

Find overhead and explain if it is over applied or under applied [2]