X Company uses a plantwide overhead allocation system, with direct labor hours as the cost driver. Budgeted overhead for the year is $806,000. The following annual budgeted and actual information is available for the only three products that it produces - A, B, C:
| A | B | C | |
| Units of production | 740 | 32,700 | 3,200 |
| Direct labor hours per unit | 7 | 2 | 3 |
| Direct labor wage rate | $18.00 | $24.00 | $27.00 |
How much overhead was allocated to Product C [round the overhead rate to two decimal places]?
Answer- The amount of overhead was allocated to Product C = $96480.
Explanation- Overhead amount allocated to Product C = $10.05 per direct labor hour*9600 labor hours
= $96480
Where- Predetermined overhead rate for overhead = Total budegted overhead/ Budgeted direct labor hours
= $806000/80180 hours
= $10.05 per direct labor hour
Where- Total budgeted direct labor hours = (740 units*7 hours per unit)+ (32700 units*2 hours per unit)+ (3200 units*3 hours per unit)
= 5180 hours+ 65400 hours+9600 hours
= 80180 hours
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