Answer the following questions using the information below:
Gus Corporation manufactured 10,000 golf bags during April. The fixed overhead cost-allocation rate is $40.00 per machine-hour. The following fixed overhead data pertain to March:

-What is the amount of fixed overhead allocated to production?
A)$200,000
B)$204,000
C)$240,000
D)$244,000

Question

Answer the following questions using the information below:
Gus Corporation manufactured 10,000 golf bags during April. The fixed overhead cost-allocation rate is $40.00 per machine-hour. The following fixed overhead data pertain to March:
 
-What is the amount of fixed overhead allocated to production?
A)$200,000 
B)$204,000 
C)$240,000 
D)$244,000

Quizplus · Accepted Answer

Fixed overhead is applied to production based on the predetermined overhead rate. The predetermined overhead rate is calculated by dividing the estimated total fixed overhead cost by the estimated total activity base. In this case, the estimated total fixed overhead cost is $200,000 and the estimated total activity base is 1,000 direct labor hours. Therefore, the predetermined overhead rate is $200 per direct labor hour. The amount of fixed overhead allocated to production is calculated by multiplying the predetermined overhead rate by the actual activity base. In this case, the actual activity base is 1,000 direct labor hours. Therefore, the amount of fixed overhead allocated to production is $200,000.

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