The Cunningham Factory has determined that its budgeted factory overhead budget for the year is $6,750,000 and budgeted direct labor hours are 5,000,000. If the actual direct labors for the period are 175,000 how much overhead would be allocated to the period?
A) $675,000
B) $129,630
C) $236,250
D) $175,000

Question

Quizplus · Accepted Answer

The overhead rate is calculated as budgeted overhead divided by budgeted direct labor hours: $6,750,000 / 5,000,000 = $1.35 per labor hour. For 175,000 actual labor hours, the overhead allocated is 175,000 * $1.35 = $236,250.

The Cunningham Factory Has Determined That Its Budgeted Factory Overhead