Question

Landen Company uses a single plantwide overhead rate based on direct labor hours. Total budgeted overhead costs are $200,000. Total budgeted direct materials are $50,000 and total budgeted direct labor hours are 80,000. What is the plantwide overhead rate per direct labor hour?

Answer 1

The plantwide overhead rate per direct labor hour is $2.50 per labor hour.

Step-by-step explanation:

Total budgeted overhead costs = $200,000

Total budgeted direct materials = $50,000

Total budgeted direct labor hours = 80,000 hours

Over head rate per labor hour = Total budgeted overhead costs / Total budgeted direct labor hours

Over head rate per labor hour = $200,000 / 80,000

Over head rate per labor hour = $2.50 per labor hour