EXERCISE 8-21 (CONTINUED)

1. The company’s estimated direct labor-hours can be computed as fol-

lows:

Deluxe model: 5,000 units × 2 DLHs per unit .... 10,000 DLHs

Regular model: 40,000 units × 1 DLH per unit .. 40,000 DLHs

Total ... 50,000 DLHs

Using just direct labor-hours as the base, the predetermined overhead

rate would be:

Estimated manufacturing overhead cost

Predetermined= overhead rate Estimated direct labor-hours

$900,000

= =$18 per DLH