Question

Franklin Glass Works’ production budget for the year ended November 30 was based on 200,000 units. Each unit requires 2 standard hours of labor for completion. Total overhead was budgeted at $900,000 for the year, and the fixed overhead rate was estimated to be $3.00 per unit. Both fixed and variable overhead are assigned to the product on the basis of direct labor hours.

The actual data for the year ended November 30 are presented as follows.

Actual production in units 198,000
Actual direct labor hours 440,000
Actual variable overhead $352,000
Actual fixed overhead $575,000

The fixed overhead applied to Franklin’s production for the year is:______

Answer 1

Allocated Fixed MOH= $660,000

Step-by-step explanation:

The fixed overhead rate was estimated to be $3.00 per unit.

Actual direct labor hours 440,000

To allocate fixed manufacturing overhead, we need to use the following formula:

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

Allocated MOH= 3*(440,000/2)

Allocated MOH= $660,000