How much overhead costs were applied to the Work-in-Process Inventory during April using traditional costing?
A)$536,000
B)$720,000
C)$736,000
D)$820,000

Question

Quizplus · Accepted Answer

The traditional overhead rate calculation is as follows:
Budgeted overhead costs / Budgeted activity level = Overhead rate
$4,320,000 / 6,000 = $720
The overhead rate is $720 per machine hour. 
During April, 920 machine hours were used in production (300 + 320 + 300). 
Thus, the overhead costs applied to Work-in-Process Inventory using traditional costing during April are:
920 machine hours x $720 per machine hour = $662,400
Therefore, the best choice is B.

How Much Overhead Costs Were Applied to the Work-In-Process Inventory