Movers Company manufactures sneakers. Production of its new sneakers for the coming three months is budgeted as follows: August 28,000 September 50,000 October 33,000 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

Giggles

Business

10 March, 20:49

Movers Company manufactures sneakers. Production of its new sneakers for the coming three months is budgeted as follows: August 28,000 September 50,000 October 33,000 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

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Jayleen Malone · Answer 1

Budgeted overhead cost = $1,250,000

Explanation:

Budgeted overhead for the month of September = Total labour hours * overhead rate per hour

Total labor hours = standard hours * budgeted production units

=2.5 hours * 40,000 = 125,000

Budgeted overhead cost Total = $10 * 125,000 = $1250000

Budgeted overhead cost = $1,250,000