Question

Levitts Corporation allocates overhead using an approach based upon direct labor-hours. Budgeted factory overhead was $150,000, budgeted direct labor-hours were 30,000. Actual factory overhead was $164,500, and actual direct labor-hours were 32,500. What amount of manufacturing overhead should the manager allocate to the job?

Answer 1

Allocated overhead= $162,500

Step-by-step explanation:

Giving the following information:

Levitts Corporation allocates overhead using an approach based upon direct labor-hours.

Budgeted factory overhead was $150,000, budgeted direct labor-hours were 30,000. Actual factory overhead was $164,500, and actual direct labor-hours were 32,500.

First, we need to calculate the manufacturing overhead rate:

manufacturing overhead rate= total estimated manufacturing overhead for the period/ total amount of allocation base

manufacturing overhead rate= 150000/ 30000= $5

Allocated overhead= manufacturing overhead rate* actual hours= 5* 32500= $162,500