Question

Blackwelder Factory produces two similar products-small lamps and desk lamps. The total plant overhead budget is $643,000 with 503,000 estimated direct labor hours. It is further estimated that small lamp production will require 284,000 direct labor hours and desk lamp production will need 219,000 direct labor hours. Using the single plantwide factory overhead rate with an allocation base of direct labor hours, how much factory overhead will Blackwelder Factory allocate to desk lamp production if actual direct hours for the period is 188,000. a. $551,982 b. $971,340 c. $240,640 d. $402,360

Answer 1

c. $240,640

Step-by-step explanation:

`(Cost\: Of \:Manufacturing \:Overhead)/(Cost \:Driver)= Overhead \:Rate`

we have to distribute the overhead cost over the cost driver

643,000 / 503,000 = 1.27833 = 1.28 rate

then we multiply this rate by the actual hours of desk lamp production

actual desk lamp hours x rate = alllocated MO

188,000 x 1.28 = 240,640