The adoption of IFRS 15 may lead to significant changes in the pattern of revenue and profit recognition. Careful consideration and planning will be needed for a range of issues, including the effect on:  Compliance with bank covenants; and
 Performance based compensations
Required:
Explain the possible reasoning behind the advice above.

Harris fabrics computes its predetermined overhead rate annually on the basis of direct labor-hours. at the beginning of the year, it estimated that 34,000 direct labor-hours would be required for the period’s estimated level of production. the company also estimated $599,000 of fixed manufacturing overhead expenses for the coming period and variable manufacturing overhead of $3.00 per direct labor-hour. harris's actual manufacturing overhead for the year was $768,234 and its actual total direct labor was 34,500 hours.required: compute the company's predetermined overhead rate for the year. (round your answer to 2 decimal places.)