Teller Co. is planning to sell 900 boxes of ceramic tile, with production estimated at 870 boxes during May. Each box of tile requires 44 pounds of clay mix and a quarter hour of direct labor. Clay mix costs $0.40 per pound and employees of the company are paid $12.00 per hour. Manufacturing overhead is applied at a rate of 110% of direct labor costs. Teller has 3,900 pounds of clay mix in beginning inventory and wants to have 4,500 pounds in ending inventory. What is the total amount to be budgeted for manufacturing overhead for the month?

$2871

Explanation:

Given the following:

Estimated production boxes = 870

Manufacturing overhead rate = 110% = 1.1

Amount paid per hour = $12.00

Quarter hour of direct labor = 1/4 = 0.25

Totall Budgeted manufacturing overhead can be calculated using the relation:

(Estimated boxes) × (Quarter Hour of Direct labor) × (Per hour cost) × (Overhead applied rate)

Total Budgeted manufacturing overhead =

(870) × (0.25) × ($12.00) × (1.1) = $2871

38800 pound of clay

Explanation:

Manufacturing overhead cost refers to all cost sustained during the production of a goods or services other than direct material and direct labor. It is made up of indirect costs like property taxes, rent of equipment, depreciation of equipment e.t.c.

Given:

Number of goods produced = 870 boxes, weight of clay for each box = 44 pounds, clay mix in beginning inventory = 3900 pounds, expected mix = 4500 pounds.

Monthly Budget for manufacturing overhead = (870 × 44) + 4500 - 3900 = 38800 pound of clay

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