Asked Apr 17, 2019

Addison Co. budgets production of 2,400 units during the second quarter. Other information is as follows:

Direct labor   Each finished unit requires 4 direct labor hours, at a cost of $20 per hour.
Variable overhead   Applied at the rate of $11 per direct labor hour.
Fixed overhead   Budgeted at $450,000 per quarter.

1. Prepare a direct labor budget.
2. Prepare a factory overhead budget.


Expert Answer

Step 1

Direct labor budget:

Direct labor budget estimates the total number of direct labor hours and total direct labor cost required to produce the  estimated production for each period. 

Overhead Budget:

Overhead budget is prepared to predict the manufacturing costs, other than direct materials and direct labor costs.

Step 2

1. Prepare a direct labor budget for Addison Co. for second quarter. 

Step 3

2. Prepare a factory overhead budget for Ad...


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