Question

Addison Co. budgets production of 2,450 units during the second quarter. Other information is as follows: Direct labor Each finished unit requires 5 direct labor hours, at a cost of $10 per hour. Variable overhead Applied at the rate of $12 per direct labor hour. Fixed overhead Budgeted at $500,000 per quarter. 1. Prepare a direct labor budget. 2. Prepare a factory overhead budget.

Answer 1

Answer:

Results are below.

Explanation:

First, we need to prepare the direct labor budget:

Direct labor budget:

Total direct labor hours required= 2,450*5= 12,250

Total direct labor cost= 12,250*10= $122,500

Now, the factory overhead budget:

Factory overhead budget:

Total variable overhead= 12*12,250= $147,000

Total fixed overhead= $500,000

Total overhead= $647,000