Question
Is Indirect Labor part of Fixed Overhead Costs? I have to calculate the Overhead Allocation Rate based on the budgeted quantity of cost drivers. From
Is Indirect Labor part of Fixed Overhead Costs?
I have to calculate the Overhead Allocation Rate based on the budgeted quantity of cost drivers.
From my problem:
Overhead is allocated on the basis of direct labor hours. Variable overhead costs include materials and supplies at $4.50 per direct labor hour. Fixed overhead costs include depreciation on equipment and vehicles of $25,000 and miscellaneous other job-related expenses of $10,000. There is also indirect labor of $6,500.
My answer:
Variable OH Cost per hr * Time to complete job = $4.50 x 2.5 = $11.25
Fixed Overhead Costs/Total budgeted hrs = (25,000 + 10,000)/13.750 = 2.55 (Do I include Indirect Labor in Fixed OH costs?)
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