Figure 11-4. Kris Company calculates its predetermined rates using practical volume,which is 325,000 units.The standard cost system allows 3 direct labor hours per unit produced.Overhead is applied using direct labor hours.The total budgeted overhead is $4,260,000,of which $994,000 is fixed overhead.The actual results for the year are as follows:
Refer to Figure 11-4.Calculate the applied fixed overhead.
A)$973,080
B)$855,030
C)$964,000
D)$910,000
E)none of these

Question

Figure 11-4. Kris Company calculates its predetermined rates using practical volume,which is 325,000 units.The standard cost system allows 3 direct labor hours per unit produced.Overhead is applied using direct labor hours.The total budgeted overhead is $4,260,000,of which $994,000 is fixed overhead.The actual results for the year are as follows:
 Refer to Figure 11-4.Calculate the applied fixed overhead.
A)$973,080 
B)$855,030 
C)$964,000 
D)$910,000 
E)none of these

Quizplus · Accepted Answer

Applied fixed overhead = predetermined fixed overhead rate × actual direct labor hours
Predetermined fixed overhead rate = (Total budgeted overhead - Variable overhead) ÷ Practical volume
Variable overhead = Total budgeted overhead - Fixed overhead
Variable overhead = $4,260,000 - $994,000 = $3,266,000
Predetermined fixed overhead rate = ($3,266,000 ÷ 325,000) = $10.04 per direct labor hour
Applied fixed overhead = ($10.04 × 96,800) = $973,080