Barenz Builders had the following information available for the past twelve months:
$\begin{array}{ll}
\text { Budgeted factory overhead costs }&\$80,000\
\text { Actual factory overhead costs }&\$82,000\
\text { Budgeted direct labor hours } & 40,000 \
\text { Actural direct labor hours } &39,500
\end{array}$
Assume the cost driver for factory overhead costs is machine hours and a job uses 10,000 machine hours.The job was budgeted to use 11,000 machine hours.What amount of factory overhead is applied to the job?
A) $20,000
B) $20,250
C) $22,000
D) $22,278

Question

Quizplus · Accepted Answer

The factory overhead rate is calculated using budgeted costs and budgeted machine hours: $80,000 / 40,000 hours = $2 per hour. The job uses 10,000 machine hours, so the applied overhead is 10,000 hours * $2/hour = $20,000.

Barenz Builders Had the Following Information Available for the Past