Challenger Factory produces two similar products: regular widgets and deluxe widgets. The total factory overhead budget is $630,400 with 330,800 estimated direct labor hours. Deluxe widget production requires 4 direct labor hours for each unit, and regular widget production requires 6 direct labor hours for each unit.

Allocated MOH = $443,120

Explanation:

Giving the following information:

The total factory overhead budget = $630,400

Estimated direct labor hour = 330,800

Deluxe widget production requires 4 direct labor hours for each unit

Regular widget production requires 6 direct labor hours for each unit.

I will assume that this is the required solution:

Using the single plantwide factory overhead rate with an allocation base of direct labor hours, how much factory overhead will Challenger Factory allocate to deluxe widget production if budgeted production for the period is 49,700 units and actual production for the period is 58,000 units?

Solution:

First, we need to calculate the plantwide predetermined overhead rate:

Estimated manufacturing overhead rate = total estimated overhead costs for the period / total amount of allocation base

Estimated manufacturing overhead rate = 630,400/330,800 = $1.91 per direct labor hour

Now, we can allocate overhead:

Allocated MOH = Estimated manufacturing overhead rate * Actual amount of allocation base

Allocated MOH = 1.91 * (58,000*4) = $443,120