Question

K Company estimates that overhead costs for the next year will be $3,204,000 for indirect labor and $900,000 for factory utilities. The company uses direct labor hours as its overhead allocation base. If 90,000 direct labor hours are planned for this next year, how much overhead would be assigned to a product requiring 5 direct labor hours

Answer 1

$228

Step-by-step explanation:

Calculation to determine how much overhead would be assigned to a product requiring 5 direct labor hours?

Using this formula

Overhead=Indirect labor +Factory utilities/DL hours *5

Let plug in the formula

Overhead=$3,204,000+$900,000/90,000*5

Overhead=$4,104,000/90,000*5

Overhead=$228

Therefore how much overhead would be assigned to a product requiring 5 direct labor hours will be $228