Elite, Inc.has estimated total factory overhead costs of $900,000, and 25,000 direct labor hours for the current fiscal year.If the direct labor hours for Job N41 is 2,000, calculate the total factory overhead applied to this job.

Question

Quizplus · Accepted Answer

The predetermined overhead rate can be calculated as follows:

Predetermined Overhead Rate = Estimated Total Factory Overhead Costs / Estimated Total Direct Labor Hours 
Predetermined Overhead Rate = $900,000 / 25,000 = $36 per direct labor hour

To calculate the total factory overhead applied to Job N41, we need to multiply the predetermined overhead rate by the actual direct labor hours for that job:

Total Factory Overhead Applied = Predetermined Overhead Rate x Actual Direct Labor Hours 
Total Factory Overhead Applied = $36 x 2,000 = $72,000

Therefore, the answer is D, $72,000.