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29 September, 05:35

Addison Co. budgets production of 2,790 units during the second quarter. Other information is as follows: Direct labor Each finished unit requires 5 direct labor hours, at a cost of $10 per hour. Variable overhead Applied at the rate of $12 per direct labor hour. Fixed overhead Budgeted at $580,000 per quarter. 1. Prepare a direct labor budget. 2. Prepare a factory overhead budget.

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  1. 29 September, 05:45
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    Answer and Explanation:

    1. The preparation of direct labor budget is given below:-

    Direct labor budget

    Units to be produced 2,790

    Hours required per unit 5

    Total labor hours needed 13,950

    (2,790 * 5)

    Labor rate per hour $10

    Direct labor budget $139,500

    (13,950 * $10)

    2. The preparation of factory overhead budget is given below:-

    Total labor hours needed 13,950

    Variable overhead rate per hour $12

    Budgeted variable overheads $167,400

    (13,950 * $12)

    Budgeted Fixed overheads $580,000

    Budgeted total overheads $747,400
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