Question

K Company estimates that overhead costs for the next year will be $2,970,000 for indirect labor and $990,000 for factory utilities. The company uses direct labor hours as its overhead allocation base. If 99,000 direct labor hours are planned for this next year, how much overhead would be assigned to a product requiring 4 direct labor hours

Answer 1

Answer:

$164

Explanation:

Data provided in the question

Indirect labor cost for the next year = $2,970,000

Factory utilities for the next year = $990,000

Planned direct labor hours = 99,000

Required direct labor hours = 4

So by considering the above information, the overhead assigned is

= (Indirect labor cost for the next year + Factory utilities for the next year) ÷ (Planned direct labor hours) × (Required direct labor hours

= ($2,970,000 + $990,000) ÷ (99,000 direct labor hours) × 4 direct labor hours

= $164