Vette Tie Corporation has developed the following manufacturing overhead standards to use in applying overhead to the production of its hand-painted silk ties. Manufacturing overhead at Vette is applied to production on the basis of standard direct labor-hours (DLHs).

The above standards were based on an expected annual volume of 60,000 ties. The actual results for last year were as follows:

-What total amount of manufacturing overhead cost (variable and fixed) did Vette apply to the 58,000 ties produced during the year?
A)$1,276,000
B)$1,403,600
C)$1,421,200
D)$1,452,000

Question

Vette Tie Corporation has developed the following manufacturing overhead standards to use in applying overhead to the production of its hand-painted silk ties. Manufacturing overhead at Vette is applied to production on the basis of standard direct labor-hours (DLHs).

The above standards were based on an expected annual volume of 60,000 ties. The actual results for last year were as follows:
 
-What total amount of manufacturing overhead cost (variable and fixed) did Vette apply to the 58,000 ties produced during the year?
A)$1,276,000 
B)$1,403,600 
C)$1,421,200 
D)$1,452,000

Quizplus · Accepted Answer

To determine the total amount of manufacturing overhead cost, we need to add the total variable and fixed manufacturing overhead costs. 
Variable manufacturing overhead cost per unit = $8.50 
Fixed manufacturing overhead cost per unit = ($1,390,000 ÷ 58,000) = $23.97 
Total manufacturing overhead cost per unit = $8.50 + $23.97 = $32.47 
Total manufacturing overhead cost for 58,000 units = $32.47 × 58,000 = $1,403,600.

Therefore, the correct answer is B.

Vette Tie Corporation Has Developed the Following Manufacturing Overhead Standards