Kings Company had the following information: $$\begin{array} { l l }
\text { Budgeted factory overhead } & \$ 75,000 \
\text { Actual factory overhead } & \$ 80,000 \
\text { Budgeted: Direct-labor hours } & 20,000 \
\text { Actual: Direct-labor hours } & 21,000
\end{array}$$ The amount of overhead applied to a company that uses 2,000 direct-labor hours is _____.
A)$8,000
B)$7,500
C)$7,140
D)$7,600

Question

Kings Company had the following information: $$\begin{array} { l l } 
\text { Budgeted factory overhead } & \$ 75,000 \
\text { Actual factory overhead } & \$ 80,000 \
\text { Budgeted: Direct-labor hours } & 20,000 \
\text { Actual: Direct-labor hours } & 21,000
\end{array}$$ The amount of overhead applied to a company that uses 2,000 direct-labor hours is _____.
A)$8,000
B)$7,500
C)$7,140
D)$7,600

Quizplus · Accepted Answer

The overhead rate is calculated as budgeted factory overhead divided by budgeted direct-labor hours, which is $75,000 / 20,000 hours = $3.75 per direct-labor hour. For 2,000 direct-labor hours, the applied overhead is 2,000 hours * $3.75 = $7,500.

Kings Company Had the Following Information The Amount of Overhead Applied to a Company That Uses