Lakeside Bakery makes pies. Each pie requires ¾ of a direct labor hour. The variable overhead rate is $0.60 per direct labor hour. Lakeside's estimated fixed overhead is $400,000. Lakeside budgets pie production at 500,000 pies for the upcoming year. What is Lakeside's total estimated overhead?

Question

Quizplus · Accepted Answer

The total estimated overhead includes both variable and fixed overhead. Variable overhead is calculated as 500,000 pies * 0.75 hours/pie * $0.60/hour = $225,000. Adding the fixed overhead of $400,000 gives a total estimated overhead of $625,000.

Lakeside Bakery Makes Pies