Question

Botosan Factory has budgeted factory overhead for the year at $13,500,000, and budgeted direct labor hours for the year are 10,000,000. If the actual direct labor hours for the month of May are 350,000, the overhead allocated for May is

Answer 1

$472,500

Step-by-step explanation:

The calculation of overhead allocated for May is shown below:-

Manufacturing Overhead Cost = (Total Estimated Overhead Cost ÷ Total Estimated Direct Labor Hours) × Actual Direct Labor Hours

= ($13,500,000 ÷ 10,000,000) × 350,000

= $1.35 × 350,000

= $472,500

Therefore for computing the overhead allocated for May we simply applied the above formula.