Connelly, Inc. applies overhead based upon machine hours. Connelly\'s annual bud

Question

Connelly, Inc. applies overhead based upon machine hours. Connelly's annual budget indicated: Connelly manufactured an order for 1,000 units of finished goods that incurred 2,000 hours of direct labor and 4,500 machine hours. The manufacturing overhead applied to this order was: During the next year, Zero Company plans to sell 200,000 units of finished goods. On January 1, the company has no units of finished goods in inventory but desires 10,000 units in finished goods inventory by December 31. If each unit requires 2 hours of direct labor at $15 per hour, Zero Company's direct labor budget is:

Explanation / Answer

4 Manufacturing overhead rate based on machine hours:- budgeted manufacturing overhead $ 1000000 Budgeted machine hours 500000 rate per hour (1000000/500000) 2 machine hours incured to produce 1000 units 4500 manufacturing overhead applied for this order 4500*2 9000 Answer is A    $9000 5 Zero company direct labour budget:- projected sales units durring year 200000 projected ending inventory units 10000 total units 210000 Direct labor hours per unit 2 total direct labour hours required 210000*2 420000 Direct labour rate per hour $ 15 Budgeted direct labour for the year 420000*15 6300000 Answer is A    $6300000

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