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

Question

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

Quizplus · Accepted Answer

The factory overhead rate is calculated as total factory overhead divided by total estimated direct labor hours: $640,000 / 400,000 hours = $1.60 per direct labor hour. For small table lamp production with actual direct labor hours of 285,000, the allocated factory overhead would be 285,000 hours * $1.60/hour = $456,000.

Blackwelder Factory Produces Two Similar Products: Small Table Lamps and Desk