Roget Factory has budgeted factory overhead for the year at $4,958,800. It plans to produce 2,000,000 units of product. Budgeted direct labor hours are 322,000, and budgeted machine hours are 750,000. Using a single plantwide factory overhead rate based on direct labor hours, the factory overhead rate for the year is?

Step-by-step explanation:

Factory overhead could be defined as the total amount incurred in production excluding direct labor or material cost. They are expenses which cannot be traced directly to a product.

Calculating factory overhead based on direct labor hours:

Budgeted factory overhead = $4,958,800

Budgeted direct labor hours = 322,000

Factory overhead rate = (Budgeted factory overhead : Budgeted direct labor hours)

Factory overhead rate = 4,958,800 : 322,000

= $15.4