Friday, 15 November 2019

Overhead is allocated on the basis of direct labor hours. Variable overhead costs include materials and

Overhead is allocated on the basis of direct labor hours. Variable overhead costs include materials and supplies at $4.50 per direct labor hour. Fixed overhead costs include depreciation on equipment and vehicles of $25,000 and miscellaneous other job-related expenses of $10,000. There is also indirect labor of $6,500. 
My answer:
Variable OH Cost per hr * Time to complete job = $4.50 x 2.5 = $11.25
Fixed Overhead Costs/Total budgeted hrs = (25,000 + 10,000)/13.750 = 2.55 (Do I include Indirect Labor in Fixed OH costs?)

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