Figure 4-2 The following information is provided by the Sandman Corporation for the year:
Refer to Figure 4-2. If normal costing is used, the amount of overhead applied for the year is
A) $414,000.
B) $400,000.
C) $480,000.
D) $460,000.

Question

Figure 4-2 The following information is provided by the Sandman Corporation for the year:
 Refer to Figure 4-2. If normal costing is used, the amount of overhead applied for the year is
A) $414,000. 
B) $400,000. 
C) $480,000. 
D) $460,000.

Quizplus · Accepted Answer

The amount of overhead applied for the year can be calculated by using the formula:
Overhead applied = Actual direct labor hours x Predetermined overhead rate
Here, the predetermined overhead rate is calculated as follows:
Predetermined overhead rate = Estimated total overhead cost / Estimated total direct labor hours
= $480,000 / 120,000
= $4 per direct labor hour
Therefore, the overhead applied for the year can be calculated as follows:
Overhead applied = Actual direct labor hours x Predetermined overhead rate
= 115,000 x $4
= $460,000
Hence, the correct answer is option D, which is $460,000.

Figure 4-2 the Following Information Is Provided by the Sandman