At the beginning of the current year CR Company estimated the following costs:
$\begin{array}{|l|r|}
\hline \text { Direct materials } & \$ 4,000 \
\hline \text { Direct labour } & 20,000 \
\hline \text { Rent on factory building } & 15,000 \
\hline \text { Sales salaries } & 25,000 \
\hline \text { Depreciation on factory equipment } & 8,000 \
\hline \text { Indirect labour } & 10,000 \
\hline \text { Production supervisor's salary } & 12,000 \
\hline
\end{array}$
CR Company estimated 20,000 labour hours to be worked during the year.Actual labour hours worked were 22,000 hours.If overhead is applied on the basis of direct labour hours,what will be the overhead applied for the year?
A) $55,000.
B) $49,500.
C) $103,400.
D) $75,900.

Question

Quizplus · Accepted Answer

To calculate the overhead applied for the year, we first determine the total estimated overhead costs, which include rent on the factory building, depreciation on factory equipment, indirect labour, and the production supervisor's salary. These sum up to $15,000 + $8,000 + $10,000 + $12,000 = $45,000. The overhead rate per direct labour hour is then $45,000 / 20,000 hours = $2.25 per hour. With 22,000 actual labour hours worked, the applied overhead is 22,000 hours * $2.25 = $49,500.

At the Beginning of the Current Year CR Company Estimated