Hudson, Inc. has estimated total factory overhead costs of $400,000, and 20,000 direct labor hours for the current fiscal year. If the direct labor hours for Job N41 is 1,500, calculate the total factory overhead applied to this job.

Question

Quizplus · Accepted Answer

To calculate the total factory overhead applied to Job N41, we need to use the predetermined overhead rate, which is calculated by dividing the estimated factory overhead costs by the estimated direct labor hours. 
Predetermined overhead rate = $400,000 / 20,000 hours = $20 per direct labor hour 
Total overhead applied to Job N41 = Predetermined overhead rate × Direct labor hours for Job N41 
Total overhead applied to Job N41 = $20 × 1,500 = $30,000. 
Therefore, the correct answer is D) $30,000.