Movers Company manufactures sneakers. Production of its new sneakers for the coming three months is budgeted as follows: August 28,000 September 50,000 October 33,000 Each sneaker requires 2.5 hours of direct labor time. Direct labor wages average $16 per hour. Monthly variable overhead averages $10 per direct labor hour plus fixed overhead of $4,500. What is the total overhead budgeted for the month of September

$1,254,500

Explanation:

Solution

Recall that:

Production of sneakers for three months budgets were :

August= 28000

September = 50,000

October = 33,000

Each sneakers requires labor time = 2.5 hours

Labor wages average = $16.

Now,

The total overhead budgeted for the month of September is calculated as follows:

The total overhead budgeted for the month of September = Variable overhead + Fixed overhead

= (50,000 units * 2.5 direct labor hours per unit * $10 per direct labor hour) + $4,500

= $1,254,500

Therefore, the total overhead budgeted for the month of September is $1,254,500

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