X Company uses a plantwide overhead allocation system, with direct labor hours as the cost driver. Budgeted overhead for the year is $884,000. The following annual budgeted and actual information is available for the only three products that it produces - X, Y, Z:
X | Y | Z | |
Units of production | 500 | 25,400 | 4,600 |
Direct labor hours per unit | 7 | 3 | 4 |
Direct labor wage rate | $18.00 | $20.00 | $25.00 |
How much overhead was allocated to Product Y?
Calculate predetermined Overhead rate | ||||
predetermined Overhead rate = Total Estimated Overhead / Total labor hours | ||||
=884000 / 98100 | ||||
9 | per direct labor hr | |||
overhead allocated to Product Y | 685,800 | (76200*9) | ||
(No. of actual hours * overhead rate) | ||||
Note 1: Calculation of total labor hours | ||||
X | Y | Z | Total | |
Units of production | 500 | 25,400 | 4,600 | |
Direct labor hours per unit | 7 | 3 | 4 | |
Labor hour required | 3500 | 76200 | 18400 | 98100 |
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