Question

X Company uses a plantwide overhead allocation system, with direct labor hours as the cost driver....

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?

Homework Answers

Answer #1
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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