Pittsburg Company uses a standard cost accounting system.The following overhead costs and production data are available for September:
Standard fixed OH rate per DLH $ \$ 1 $
Standard variable $ \mathrm{OH} $ rate per $ \mathrm{DLH} $ $ \$ 4 $
Buclgeted monthly $ \mathrm{DLH} $ s 40,000
Actual DLHs worked 39,500
Standard DLHs allowed for actual production 39,500
Qveral1 $ \mathrm{OH} $ variance-favorable $2,000

The total applied manufacturing overhead for September should be
A)$195,000.
B)$197,000.
C)$197,500.
D)$199,500.

Question

Pittsburg Company uses a standard cost accounting system.The following overhead costs and production data are available for September:
Standard fixed OH rate per DLH                       $ \$ 1 $
Standard variable $ \mathrm{OH} $ rate per $ \mathrm{DLH} $              $ \$ 4 $
Buclgeted monthly $ \mathrm{DLH} $ s                            40,000
Actual DLHs worked                                     39,500
Standard DLHs allowed for actual production           39,500
Qveral1 $ \mathrm{OH} $ variance-favorable                    $2,000

The total applied manufacturing overhead for September should be
A)$195,000.
B)$197,000.
C)$197,500.
D)$199,500.

Quizplus · Accepted Answer

The total applied manufacturing overhead is calculated as follows:Standard fixed overhead rate per DLH x Budgeted monthly DLHs + Standard variable overhead rate per DLH x Actual DLHs worked= $1 x 40,000 + $4 x 39,500= $40,000 + $158,000= $198,000Since the overall OH variance is favorable by $2,000, the total applied manufacturing overhead should be $198,000 - $2,000 = $196,000.However, the answer choices are rounded to the nearest $500, so the correct answer is A) $195,000.

Pittsburg Company Uses a Standard Cost Accounting System $1 \$ 1 $1

Pittsburg Company Uses a Standard Cost Accounting System $\$ 1$