Question

34. Teller Co. is planning to sell 900 boxes of ceramic tile, with production estimated at 870 boxes during May. Each box of tile requires 44 pounds of clay mix and a quarter hour of direct labor. Clay mix costs $0.40 per pound and employees of the company are paid $12.00 per hour. Manufacturing overhead is applied at a rate of 110% of direct labor costs. Teller has 3,900 pounds of clay mix in beginning inventory and wants to have 4,500 pounds in ending inventory. What is the total amount to be budgeted for manufacturing overhead for the month?

Answer 1

budgeted manufacturing overhead=$2871

Step-by-step explanation:

Direct labour hours= budgeted production × standard hours per unit

= 870× 1/4 hour=217.5 hours

Direct labour cost = 217.5 × $12 =$2610

Manufacturing overhead = Overhead absorption rate × direct labour cost

= 110%×2610 =2,871

Budgeted manufacturing overhead=$2871