Question

Bagley Corporation expects to incur $900,000 of factory overhead and $600,000 of general and administrative costs next year. Direct labor costs at $20 per hour are expected to total $300,000. If factory overhead is to be applied per direct labor hour, how much overhead will be applied to a job incurring 40 hours of direct labor?

Answer 1

Overheads apply = $2,400

Step-by-step explanation:

given data

factory overhead = $900,000

general and administrative costs = $600,000

per hour = $20

Direct labor costs = $300,000

solution

we know here Total direct labor hours that is

Total direct labor hours =
`($300000)/($20)`

Total direct labor hours = 15,000 direct labor hours

so here Factory overheads per direct labor hour will be

Factory overheads per direct labor hour =
`(900000)/(15000)`

Factory overheads per direct labor hour = $60 per direct labor hour

so here Overheads applied to Job will be

Overheads apply = 40 direct labor hours × $60 per direct labor

Overheads apply = $2,400