Question

Blackwelder Factory produces two similar products-small lamps and desk lamps. The total plant overhead budget is $667,000 with 465,000 estimated direct labor hours. It is further estimated that small lamp production will require 299,000 direct labor hours and desk lamp production will need 166,000 direct labor hours. Using the single plantwide factory overhead rate with an allocation base of direct labor hours, how much factory overhead will Blackwelder Factory allocate to desk lamp production if actual direct hours for the period is 249,000. a.$356,070 b.$800,936 c.$1,000,500 d.$310,930

Answer 1

Allocated MOH= $356,070

Step-by-step explanation:

Giving the following information:

Estimated overhead= $667,000

Estimated direct labor hours= 465,000

Actual direct labor hours for lamp desk= 249,000

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= 667,000/465,000

Predetermined manufacturing overhead rate= $1.43 per direct labor hour

Now, we can allocate overhead:

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

Allocated MOH= 1.43*249,000

Allocated MOH= $356,070