If the budgeted factory overhead cost is $460,000, the budgeted direct labor hours are 80,000, and the actual direct labor hours are 6,700 for the month, the factory overhead rate for the month is $68.65 (if the allocation is based on direct labor hours).

Question

Quizplus · Accepted Answer

The factory overhead rate is calculated by dividing the budgeted factory overhead cost by the budgeted direct labor hours. Therefore, the rate is $460,000 / 80,000 = $5.75 per direct labor hour, not $68.65.

If the Budgeted Factory Overhead Cost Is $460,000, the Budgeted