Question

Cahya, financial manager of Citra Garments Exports, is trying to calculate budgeted fixed overhead cost per output unit. The following details are available: Estimated machine hours required 16,000 hours Estimated labor hours required 24,000 hours Budgeted total costs in fixed overhead cost pool $5,600,000 Budgeted total production 20,000 units What is the Budgeted fixed overhead cost per unit of cost-allocation base

Answer 1

Budgeted fixed overhead (machine hours) = $350

Budgeted fixed overhead (labor hours) = $233.33

Step-by-step explanation:

GIVEN THE FOLLOWING ;

Estimated machine hours = 16,000

Estimated labor hours = 24,000

Budgeted Total fixed overhead cost = $5,600,000

Budgeted Total production = 20,000

Budgeted fixed overhead cost per unit of Cost-allocation base is given by;

Budgeted Total fixed overhead ÷ unit of Cost-allocation base

Cost-allocation base in the question could either be :

Machine-hours or labor-hours

Allocation base :MACHINE HOURS ;

Budgeted fixed overhead cost =

Budgeted Total fixed overhead ÷ Estimated Machine hours

$5,600,000 ÷ 16,000 = $350

2) Allocation base :LABOR HOURS ;

Budgeted fixed overhead cost =

Budgeted Total fixed overhead ÷ Estimated Labor-hours

$5,600,000 ÷ 24,000 = $233.33

Answer 2

Machine- hours:

Estimated manufacturing overhead rate= $350 per machine hour

Direct-labor hours:

Estimated manufacturing overhead rate= $233.33 per direct labor hour

Step-by-step explanation:

Giving the following information:

Estimated machine hours required 16,000 hours

Estimated labor hours required 24,000 hours

Budgeted total costs in fixed overhead cost pool $5,600,000

Budgeted total production 20,000 units

We will calculate the fixed cost per unit using both machine and labor hours.

To calculate the estimated manufacturing overhead rate we need to use the following formula:

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

Machine- hours:

Estimated manufacturing overhead rate= 5,600,000/16,000= $350 per machine hour

Direct-labor hours:

Estimated manufacturing overhead rate= 5,600,000/24,000= $233.33