(Appendix 10A) A furniture manufacturer uses a standard costing system in which standard machine-hours (MHs) is the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below:
The following data pertain to operations for the most recent period:

-The overhead applied to products during the period was closest to:
A) $30,000
B) $30,240
C) $27,300
D) $29,400

Question

(Appendix 10A) A furniture manufacturer uses a standard costing system in which standard machine-hours (MHs) is the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below:
  The following data pertain to operations for the most recent period:
 
-The overhead applied to products during the period was closest to:
A) $30,000 
B) $30,240 
C) $27,300 
D) $29,400

Quizplus · Accepted Answer

Predetermined overhead rate = Budgeted total overhead ÷ Denominator level of activity
= ($12,040 + $17,360) ÷ 1,400 hours
= $29,400 ÷ 1,400 hours
= $21.00 per hour
Overhead applied = Predetermined overhead rate × Standards hours allowed for the actual output
= $21.00 per hour × 1,440 hours
= $30,240

(Appendix 10A) a Furniture Manufacturer Uses a Standard Costing System