The following information was gathered for White Sox Company: $$\begin{array} { l r }
\text { Budgeted direct-labor hours } & 34,000 \
\text { Actual direct-labor hours } & 32,400 \
\text { Budgeted factory overhead } & \$ 144,500 \
\text { Actual factory overhead } & \$ 155,980
\end{array}$$ Assume the cost driver is direct-labor hours.The amount of factory overhead applied is _____.
A)$144,500
B)$137,700
C)$142,922
D)$149,980

Question

The following information was gathered for White Sox Company: $$\begin{array} { l r } 
\text { Budgeted direct-labor hours } & 34,000 \
\text { Actual direct-labor hours } & 32,400 \
\text { Budgeted factory overhead } & \$ 144,500 \
\text { Actual factory overhead } & \$ 155,980
\end{array}$$ Assume the cost driver is direct-labor hours.The amount of factory overhead applied is _____.
A)$144,500
B)$137,700
C)$142,922
D)$149,980

Quizplus · Accepted Answer

The amount of factory overhead applied is calculated by multiplying the actual direct-labor hours by the predetermined overhead rate (budgeted factory overhead divided by budgeted direct-labor hours). Predetermined overhead rate = $144,500 / 34,000 hours = $4.25 per hour. Factory overhead applied = 32,400 hours * $4.25 = $137,700.

The Following Information Was Gathered for White Sox Company Assume the Cost Driver Is Direct-Labor Hours