Miami solar budgets production of 5,300 solar panels for August. Each unit requires 4 hours of direct labor at a rate of $16 per hour. Variable factory overhead is budgeted to be 70% of direct labor cost, and fixed factory overhead is $180,000 per month.

Required:

a. Prepare a factory overhead budget for August.

Question

Ramon Petty

Business

26 July, 18:03

Miami solar budgets production of 5,300 solar panels for August. Each unit requires 4 hours of direct labor at a rate of $16 per hour. Variable factory overhead is budgeted to be 70% of direct labor cost, and fixed factory overhead is $180,000 per month.

Required:

a. Prepare a factory overhead budget for August.

+1

Answers (1)

Know the Answer?

Dawson Buckley · Answer 1

The total factory overhead budget = $407,440

Explanation:

The total factory overhead budget is the addition of the variable overhead and fixed production overheads

This is done as follows:

Direct labour cost budgeted

= 4hours * 5,300 * $16

= $339,200

Variable overhead budget

= 70% of Direct labour cost

= 70% * $339,200

= $237,440

Fixed production Overhead = $170,000

The total factory overhead budget

=$237,440 + $170,000

= $407,440

The total factory overhead budget = $407,440