Jorgensen Furniture uses job costing and allocates its $500,000 of budgeted overhead costs using labour hours. The rate is $25 per labour hour. How many hours are used as normal volume for the overhead allocation base?

Question

Quizplus · Accepted Answer

The normal volume for the overhead allocation base is calculated by dividing the total budgeted overhead costs by the overhead rate per labour hour. $500,000 / $25 per hour = 20,000 hours.

Jorgensen Furniture Uses Job Costing and Allocates Its $500,000 of Budgeted