Washington Company made the following estimates for the current accounting period: Overhead costs: $250,000
Direct labor hours: 50,000
If 7,000 hours of labor are actually used in February,how much overhead cost would be allocated to work in process during the month? Assume Overhead to be allocated on the basis of direct labor hours.
A) $7,000
B) $35,714
C) $35,000
D) $20,833

Question

Quizplus · Accepted Answer

Predetermined overhead rate = Expected overhead costs ÷ Expected amount of allocation base
Predetermined overhead rate = $250,000 ÷ 50,000 direct labor hours = $5.00 per direct labor hour
Overhead applied = Actual amount of allocation base x Predetermined overhead rate
Overhead applied = 7,000 direct labor hours x $5.00 per direct labor hour = $35,000

Washington Company Made the Following Estimates for the Current Accounting