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16 February, 18:07

Challenger Factory produces two similar products: regular widgets and deluxe widgets. The total factory overhead budget is $675,000 with 300,000 estimated direct labor hours. Deluxe widget production requires 3 direct labor hours for each unit, and regular widget production requires 2 direct labor hours for each unit. Using a single plantwide factory overhead rate with an allocation base of direct labor hours, the factory overhead that Challenger Factory will allocate to regular widget production if budgeted production of regular widgets for the period is 75,000 units and actual production of regular widgets for the period is 72,000 units would bea. $168,750 b. $324,000 c. $162,000 d. $337,500

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  1. 16 February, 21:15
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    The correct answer is B.

    Explanation:

    Giving the following information:

    Total estimated overhead = $675,000

    Total estimated direct labor hours = 300,000 hours

    Regular widget production requires 2 direct labor hours for each unit.

    The actual production of regular widgets for the period is 72,000 units.

    First, we need to calculate the estimated overhead rate:

    Estimated manufacturing overhead rate = total estimated overhead costs for the period / total amount of allocation base

    Estimated manufacturing overhead rate = 675,000/300,000 = $2.25 per direct labor hour

    Now, we can allocate overhead to regular widgets:

    Allocated MOH = Estimated manufacturing overhead rate * Actual amount of allocation base

    Actual direct labor hours = 72,000 units*2hours = 144,000 hours

    Allocated MOH = 2.25*144,000 = $324,000
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