Blackwelder Factory produces two similar products - small lamps and desk lamps. The total plant overhead budget is $640,000 with 400,000 estimated direct labor hours. It is further estimated that small lamp production will require 275,000 direct labor hours and desk lamp production will need 125,000 direct labor hours. Using the single plantwide factory overhead rate with an allocation base of direct labor hours, how much factory overhead will be allocated to the small lamp production if the actual direct hours for the period is 285,000?
A) $275,000
B) $285,000
C) $440,000
D) $456,000

Question

Quizplus · Accepted Answer

The single plantwide factory overhead rate can be calculated as follows:

Plantwide factory overhead rate = Total plant overhead budget / Total estimated direct labor hours
= $640,000 / 400,000 direct labor hours
= $1.60 per direct labor hour

To allocate the factory overhead to small lamp production, we can multiply the actual direct labor hours for small lamps by the plantwide factory overhead rate:

Factory overhead allocated to small lamps = Actual direct labor hours for small lamps x Plantwide factory overhead rate
= 275,000 direct labor hours x $1.60 per direct labor hour
= $440,000

Therefore, the correct answer is D, $456,000.

Blackwelder Factory Produces Two Similar Products - Small Lamps and Desk