Lowden Company has an overhead application rate of 160% and allocates overhead based on direct material cost. During the current period, direct labor cost is $50,000 and direct materials used cost $80,000. Determine the amount of overhead Lowden Company should record in the current period.
A) $128,000.
B) $80,000.
C) $50,000.
D) $31,250.
E) $208,000.

Question

Quizplus · Accepted Answer

The overhead is calculated as 160% of the direct materials cost. Therefore, the overhead is 160% of $80,000, which equals $128,000.

Lowden Company Has an Overhead Application Rate of 160% and Allocates