Question

The Botosan Factory has determined that its budgeted factory overhead budget for the year is $601,880 and budgeted direct labor hours are 367,000. If the actual direct labor hours for the period are 334,000, how much overhead would be allocated to the period

Answer 1

Allocated MOH= $541,200

Step-by-step explanation:

Giving the following information:

Estimated overhead= $601,880

Budgeted direct labor hours= 367,000

The actual direct labor hours for the period are 334,000

First, we need to calculate the predetermined overhead rate:

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

Predetermined manufacturing overhead rate= 601,880/367,000

Predetermined manufacturing overhead rate= $1.64 per direct labor hour

Now, we can allocate overhead:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Allocated MOH= 1.64*334,000

Allocated MOH= $541,200