Question

Hercules Inc. allocates MOH in accordance with the direct labor hours. The supervisor has estimated 40,000 direct labor hours and $800,000 of budgeted MOH for the fiscal year. This project was accomplished with 225 hours of direct labor.What is the budgeted MOH rate for Custom Fabricators for this year?

Answer 1

The budgeted manufacturing overhead (MOH) rate for Hercules Inc. is $20 per hour, calculated by dividing the total budgeted MOH of $800,000 by the estimated direct labor hours of 40,000.

Step-by-step explanation:

To calculate the budgeted MOH rate for Hercules Inc., we need to divide the total budgeted manufacturing overhead (MOH) by the total estimated direct labor hours.

Given the budgeted MOH is $800,000 and the estimated direct labor hours are 40,000, the MOH rate can be calculated as follows:

Budgeted MOH Rate = Budgeted MOH / Estimated Direct Labor Hours

Budgeted MOH Rate = $800,000 / 40,000 hours

Budgeted MOH Rate = $20 per hour

Therefore, for every hour of direct labor, Hercules Inc. will allocate $20 of MOH.