Levitts Corporation allocates overhead using an approach based upon direct labor-hours. Budgeted factory overhead was $150,000, budgeted direct labor-hours were 30,000. Actual factory overhead was $164,500, and actual direct labor-hours were 32,500. What amount of manufacturing overhead should the manager allocate to the job?

Question

Zachary Huynh

Business

29 October, 13:04

Levitts Corporation allocates overhead using an approach based upon direct labor-hours. Budgeted factory overhead was $150,000, budgeted direct labor-hours were 30,000. Actual factory overhead was $164,500, and actual direct labor-hours were 32,500. What amount of manufacturing overhead should the manager allocate to the job?

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Jaxon · Answer 1

Allocated overhead = $162,500

Explanation:

Giving the following information:

Levitts Corporation allocates overhead using an approach based upon direct labor-hours.

Budgeted factory overhead was $150,000, budgeted direct labor-hours were 30,000. Actual factory overhead was $164,500, and actual direct labor-hours were 32,500.

First, we need to calculate the manufacturing overhead rate:

manufacturing overhead rate = total estimated manufacturing overhead for the period / total amount of allocation base

manufacturing overhead rate = 150000 / 30000 = $5

Allocated overhead = manufacturing overhead rate * actual hours = 5 * 32500 = $162,500