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 \$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

= \$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