EXERCISE 8-21 (CONTINUED)

1. The company expects to work 40,000 direct labor-hours, computed as

follows:

Mono-relay: 40,000 units × 0.75 DLH per unit... 30,000 DLHs

Bi-relay: 10,000 units × 1.0 DLH per unit... 10,000 DLHs

Total ... 40,000 DLHs

Using direct labor-hours as the base, the predetermined manufacturing

overhead rate would be:

Estimated manufacturing overhead cost

Predetermined = overhead rate Estimated direct labor-hours

$1,000,000

= = $25 per DLH