Logan Products computes its predetermined overhead rate annually on the basis of direct labor-hours.
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Logan Products computes its predetermined overhead rate annually on the basis of direct labor-hours. At the beginning of the year, it estimated that 39,000 direct labor-hours would be required for the period’s estimated level of production. The company also estimated $527,000 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 $717,431 and its actual total direct labor was 39,500 hours.
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