The Baffin Factory has determined that its budgeted factory overhead budget for the year is $7,750,000. They plan to produce 1,000,000 units. Budgeted direct labor hours are 525,000 and budgeted machine hours are 375,000. Using the single plantwide factory overhead rate based on direct labor hours, calculate the factory overhead rate for the year.
A) $14.76
B) $20.67
C) $7.75
D) $77.50

Question

Quizplus · Accepted Answer

The factory overhead rate is calculated by dividing the budgeted factory overhead budget by the budgeted direct labor hours. In this case, the factory overhead rate is $7,750,000 / 525,000 = $14.76.

The Baffin Factory Has Determined That Its Budgeted Factory Overhead