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kay company budgets overhead cost of $3,700,000 for the next year. the company uses direct labor hours as its overhead allocation base. if 80,000 direct labor hours are planned for the next year, how much overhead would be assigned to a product requiring 4 direct labor hours?



Answer :

abiolataiwo2015

If  the company uses direct labor hours as its overhead allocation base. if 80,000 direct labor hours are planned for the next year, The amount of overhead that would be assigned to a product requiring 4 direct labor hours is: $185.

How to determine the overhead amount?

Using this formula to find the overhead amount

Overhead = Overhead cost / Direct labor hours  overhead allocation base × direct labor hours

Let plug in the formula

Overhead = $3,700,000 /80,000 direct labor hours  × 4 direct labor hours

Overhead = $46.25 per direct labor hour × 4 direct labor hours

Overhead = $185.00

Therefore the overhead amount is $185.

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