Cahya, financial manager of Citra Garments Exports, is trying to calculate budgeted fixed overhead cost per output unit. The following details are available: Estimated machine hours required 16,000 hours Estimated labor hours required 24,000 hours Budgeted total costs in fixed overhead cost pool $5,600,000 Budgeted total production 20,000 units What is the Budgeted fixed overhead cost per unit of cost-allocation base

Budgeted fixed overhead (machine hours) = $350

Budgeted fixed overhead (labor hours) = $233.33

Explanation:

GIVEN THE FOLLOWING ;

Estimated machine hours = 16,000

Estimated labor hours = 24,000

Budgeted Total fixed overhead cost = $5,600,000

Budgeted Total production = 20,000

Budgeted fixed overhead cost per unit of Cost-allocation base is given by;

Budgeted Total fixed overhead ÷ unit of Cost-allocation base

Cost-allocation base in the question could either be :

Machine-hours or labor-hours

Allocation base :MACHINE HOURS ;

Budgeted fixed overhead cost =

Budgeted Total fixed overhead ÷ Estimated Machine hours

$5,600,000 ÷ 16,000 = $350

2) Allocation base :LABOR HOURS ;

Budgeted fixed overhead cost =

Budgeted Total fixed overhead ÷ Estimated Labor-hours

$5,600,000 ÷ 24,000 = $233.33

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