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Consider the following information: Budgeted indirect cost $2,000 Budgeted production units 800 Budgeted direct manufacturing labor hours 500 Budgeted customer orders 400 Actual number of setups 1,000 Using broad averaging, what is the budgeted indirect-cost rate per direct manufacturing labor-hour

Answer :

anthougo

The budgeted indirect cost rate is $4.00 per direct manufacturing labor-hour.

Data and Calculations:

Budgeted indirect cost for the period = $2,000

Budgeted production units for the period = 800 units

Budgeted direct manufacturing labor hours = 500 hours

Budgeted customer orders for the period = 400 orders

Actual number of setups = 1,000 setups

Therefore, the budgeted indirect cost rate per direct manufacturing labor-hour = Budgeted indirect cost divided by the budgeted direct manufacturing labor hours.

= $4 ($2,000/500)

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