Moriah Manufacturing Company expects to incur the following per unit costs for 1,000 units of production: $$\begin{array} { l l }
\text { Direct materials } & 3 \mathrm { lb } @ \$ 5 = \$ 15 \
\text { Direct labor } & 1 \text { hr } @ 6 = \$ 6 \
\text { Variable overhead } & 75 \% \text { of direct } \
& 1 \text { labor costs } \
\text { Fixed overhead } & 50 \% \text { of direct } \
& 1 \text { abor costs }
\end{array}$$ What is the total amount of overhead included in the overhead budget?

Question

Moriah Manufacturing Company expects to incur the following per unit costs for 1,000 units of production: $$\begin{array} { l l } 
\text { Direct materials } & 3 \mathrm { lb } @ \$ 5 = \$ 15 \
\text { Direct labor } & 1 \text { hr } @ 6 = \$ 6 \
\text { Variable overhead } & 75 \% \text { of direct } \
& 1 \text { labor costs } \
\text { Fixed overhead } & 50 \% \text { of direct } \
& 1 \text { abor costs }
\end{array}$$ What is the total amount of overhead included in the overhead budget?

Quizplus · Accepted Answer

The total overhead includes both variable and fixed overhead. Variable overhead is 75% of direct labor costs, and fixed overhead is 50% of direct labor costs. Direct labor costs are $6 per unit. Therefore, variable overhead per unit is $6 * 75% = $4.50, and fixed overhead per unit is $6 * 50% = $3.00. The total overhead per unit is $4.50 + $3.00 = $7.50. For 1,000 units, the total overhead is $7.50 * 1,000 = $7,500.

Moriah Manufacturing Company Expects to Incur the Following Per Unit