Botosan Factory has budgeted factory overhead for the year at $13,500,000, and budgeted direct labor hours for the year are 10,000,000. If the actual direct labor hours for the month of May are 350,000, the overhead allocated for May is
A)$675,000
B)$470,630
C)$472,500
D)$236,250

Question

Quizplus · Accepted Answer

The overhead rate per direct labor hour is calculated by dividing the total budgeted factory overhead by the total budgeted direct labor hours ($13,500,000 / 10,000,000 = $1.35 per hour). For May, with 350,000 actual direct labor hours, the allocated overhead is 350,000 hours * $1.35/hour = $472,500.

Botosan Factory Has Budgeted Factory Overhead for the Year at $13,500,000