Marine Enterprises has developed the following unit costs for the production of one of its products,based on a normal activity of 10,000 units per month:
$$\begin{array} { | l | l | }
\hline \text { Direct materials } & 2.0 \text { pounds } @ \$ 12 = \$ 24.00 \
\hline \text { Direct labor } & 1.5 \text { hours } @ \$ 15 = \$ 22.50 \
\hline \text { Variable overhead } & 120 \% \text { of direct labor cost } \
\hline \text { Fixed owerhead } & 140 \% \text { of direct labor cost } \
\hline
\end{array}$$
What is the total amount of overhead included in the overhead budget for a month in which production is expected to be 11,000 units?
A) $612,000.
B) $643,500.
C) $600,000.
D) $594,000.

Question

Marine Enterprises has developed the following unit costs for the production of one of its products,based on a normal activity of 10,000 units per month: 
$$\begin{array} { | l | l | } 
\hline \text { Direct materials } & 2.0 \text { pounds } @ \$ 12 = \$ 24.00 \
\hline \text { Direct labor } & 1.5 \text { hours } @ \$ 15 = \$ 22.50 \
\hline \text { Variable overhead } & 120 \% \text { of direct labor cost } \
\hline \text { Fixed owerhead } & 140 \% \text { of direct labor cost } \
\hline
\end{array}$$
What is the total amount of overhead included in the overhead budget for a month in which production is expected to be 11,000 units?
A) $612,000.
B) $643,500.
C) $600,000.
D) $594,000.

Quizplus · Accepted Answer

Variable overhead = 120% of direct labor cost = 120% x $22.50 = $27.00 per unitFixed overhead = 140% of direct labor cost = 140% x $22.50 = $31.50 per unitTotal overhead per unit = $27.00 + $31.50 = $58.50Total overhead for 11,000 units = $58.50 x 11,000 = $643,500

Marine Enterprises Has Developed the Following Unit Costs for the Production