Question

Addison Co. budgets production of 2,400 units during the second quarter. Other information is as follows: Direct labor Each finished unit requires 4 direct labor hours, at a cost of $20 per hour. Variable overhead Applied at the rate of $11 per direct labor hour. Fixed overhead Budgeted at $450,000 per quarter. 1. Prepare a direct labor budget. 2. Prepare a factory overhead budget.

Answer 1

1. Total direct labor: $192,000

2. Total factory overhead budget: $555,600

Step-by-step explanation:

1. Total direct labor

Addison Co.

Direct labour budget for the second quarter

Budgeted production units 2,400

Direct labor hour per one unit 4

Total direct labor hour needed 9,600

Cost per one direct labor 20

Total direct labor $192,000

2. Total factory overhead budget:

Addison Co.

Factory overhead budget for the second quarter

Total direct labor hours needed 9,600

Variable rate per direct labor 11

Budgeted variable overhead $105,000

Budgeted fixed overhead $450,000

Total factory overhead $555,000