Movers Company manufactures sneakers.Production of their new sneaker for the coming three months is budgeted as follows:
Each sneaker requires 2.5 hours of direct labor time.Direct labor wages average $16 per hour.Monthly variable overhead averages $10 per direct labor hour plus fixed overhead of $4,500.What is the total overhead budgeted for the month of September?

Question

Movers Company manufactures sneakers.Production of their new sneaker for the coming three months is budgeted as follows:  
 Each sneaker requires 2.5 hours of direct labor time.Direct labor wages average $16 per hour.Monthly variable overhead averages $10 per direct labor hour plus fixed overhead of $4,500.What is the total overhead budgeted for the month of September?

Quizplus · Accepted Answer

Total budgeted overhead for the month of September = (Monthly variable overhead rate × Budgeted production for the month of September × Direct labor time per unit in hours) + Budgeted fixed overhead
Total budgeted overhead for the month of September = ($10 × 50,000 sneakers × 2.50 direct labor hours) + $4,500 = $1,254,500

Movers Company Manufactures Sneakers