Question

Cheyenne Company is planning to produce 2,700 units of product in 2017. Each unit requires 1.60 pounds of materials at $5.40 per pound and a half-hour of labor at $14.00 per hour. The overhead rate is 80% of direct labor. Collapse question part (a) Compute the budgeted amounts for 2017 for direct materials to be used, direct labor, and applied overhead. Direct materials $ Direct labor $ Overhead

Answer 1

1.

Units to be produced	2,700
(x) Direct materials required per unit ( pounds )	1.60
Total direct materials to be used ( pounds )	4,320
(x) Rate per pound	$5.40
Budgeted amount of direct materials to be used	$23,328

2.

Units to be produced	2,700
(x) Direct labor hour required per unit	0.5
Total direct labor hours required	1,350
(x) Rate per direct labor hour	$14
Budgeted amount of direct labor	$18,900

3. Applied overhead = 80% of direct labor cost = 80% * $18,900 = $15,120