The following budget data are available for Sharp Company: Estimated direct labor hours
12,000
Estimated direct labor dollars
$90,000
Estimated factory overhead costs
$180,000
Actual direct labor hours
11,500
Actual direct labor dollars
$92,000
Actual factory overhead costs
$181,000
If factory overhead is applied based on direct labor hours, the amount of overhead to be applied is

Question

Quizplus · Accepted Answer

Factory overhead is applied based on direct labor hours. Therefore, the amount of overhead to be applied is calculated as follows: 
Overhead rate per direct labor hour = Estimated factory overhead costs / Estimated direct labor hours = $180,000 / 12,000 = $15 per direct labor hour 
Overhead applied = Overhead rate per direct labor hour x Actual direct labor hours 
= $15 x 11,500 = $172,500 
Thus, the best choice is C.

The Following Budget Data Are Available for Sharp Company: Estimated