Question

Botosan Factory has budgeted factory overhead for the year at $717,474, and budgeted direct labor hours for the year are 364,200. If the actual direct labor hours for the month of May are 331,400, the overhead allocated for May is

Answer 1

Answer:

$652,858

Explanation:

Predetermined overhead rate = Budgeted Overheads ÷ Budgeted Activity

                                                    = $717,474 ÷  364,200

                                                    = $1.97 per direct labor hour

Allocated overheads = Predetermined overhead rate x Actual Activity

                                    = $1.97 x  331,400 direct labor hours

                                     = $652,858

therefore,

The overhead allocated for May is $652,858.