Question - Addison Co. budgets production of 2,860 units during the second quarter. Other information is as follows:
Direct labor - Each finished unit requires 5 direct labor hours, at a cost of $10 per hour.
Variable overhead - Applied at the rate of $12 per direct labor hour.
Fixed overhead - Budgeted at $650,000 per quarter.
1. Prepare a direct labor budget.
2. Prepare a factory overhead budget.