Exercise 7-7 Manufacturing: Direct labor and factory overhead budgets LO P1 Addi

Question

Exercise 7-7 Manufacturing: Direct labor and factory overhead budgets LO P1 Addison Co. budgets production of 2,840 units during the second quarter. Other information is as follows: Direct labor Variable overhead Fixed overhead Each finished unit requires 4 direct labor hours, at a cost of $8 per hour Applied at the rate of $10 per direct labor hour. Budgeted at $630,000 per quarter 1. Prepare a direct labor budget. 2. Prepare a factory overhead budget Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a direct labor budget. ADDISON CO. Direct Labor Budget Second Quarter Units to be produced 2,840 units Total labor hours needed Budgeted direct labor cost Required 1 Required 2>

Explanation / Answer

DIRECT LABOUR COST BUDGET Units to be produced 2840 Units Labour hours required per unit 4 hr Total Labour hours required 11360 hrs Direct cost per hour 8 Budgeted Labour cost in $ 90880 FACTORY OVERHEAD BUDGET Total Labour hours needed 11360 hrs variable overhead rate per hour 10 Budgeted Variable overheads in $ 113600 Budgeted Fixed Overheads in $ 630000 Budgeted Total overheads in $ 743600

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