Each unit requires 4 hours of direct labor at a rate of $13 per hour. Variable factory overhead is budgeted to be 70% of direct labor cost, and fixed factory overhead is $179,000 per month. Prepare a factory overhead budget for August.

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Miami solar budgets production of 5,300 solar panels for August. Each unit requires 4 hours of direct labor at a rate of $13 per hour. Variable factory overhead is budgeted to be 70% of direct labor cost, and fixed factory overhead is $179,000 per month.

direct labor costs per unit = $13 x 4 = $52

variable overhead costs per unit = $52 x 70% = $36.40

Miami Solar

Factory Overhead Budget

For the month of August, 202x

Budgeted production units                   5,300 units

Variable overhead per unit                   $36.40  

Budgeted variable overhead               $192,920

Budgeted fixed overhead                    $179,000

Budgeted total overhead                     $371,920

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