Asked by taylor harrington on May 28, 2024
Verified
Botosan Factory has budgeted factory overhead for the year at $13,500,000, and budgeted direct labor hours for the year are 10,000,000. If the actual direct labor hours for the month of May are 350,000, the overhead allocated for May is
A) $675,000
B) $470,630
C) $472,500
D) $236,250
Budgeted Factory Overhead
The estimated costs associated with running a factory that are not directly tied to producing goods, such as utilities and maintenance.
Direct Labor Hours
The total number of hours worked by employees directly involved in the production process of goods or services.
- Apply different factory overhead allocation methods including single plantwide rate and multiple department rates.
Verified Answer
SS
Samantha SolisMay 31, 2024
Final Answer :
C
Explanation :
The overhead rate per direct labor hour is calculated by dividing the total budgeted factory overhead by the total budgeted direct labor hours ($13,500,000 / 10,000,000 = $1.35 per hour). For May, with 350,000 actual direct labor hours, the allocated overhead is 350,000 hours * $1.35/hour = $472,500.
Learning Objectives
- Apply different factory overhead allocation methods including single plantwide rate and multiple department rates.
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