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16 September, 07:42

If the budgeted factory overhead cost is $460,000, the budgeted direct labor hours is 80,000, and the actual direct labor hours is 6,700 for the month, the amount of factory overhead to be allocated is $38,525 (if the allocation is based on direct labor hours). A. TrueB. False

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  1. 16 September, 08:02
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    TRUE

    Explanation:

    Now, Given that,

    Total budget factory cost = 460000

    Budgeted labour hours = 80 000

    Actual direct labour hours = 6700

    Thus,

    Predetermined overhead rate = total budgeted factory cost : budgeted hours

    = 460000 : 80000

    = 5.75

    Therefore,

    Having gotten that, we can now calculate for amount of factory overhead which is given as

    = Actual direct labour hours * predetermined rate

    = 6700 * 5.75

    = $38,525

    $38525 is equivalent to the values given in the question, thus answer is TRUE.
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