Union Company uses a standard cost accounting system.The following overhead costs and production data are available for August:
$\begin{array}{|l|r|}
\hline \text { Standard Fixed Overhead Rate } & \$ 1.00 \text { per hour } \
\hline \text { Standard Variable Overhead Rate } & \$ 4.00 \text { per hour } \
\hline \text { Denominator Activity } & 40,000 \text { hours } \
\hline \text { Actual Hours } & 39,500 \text { hours } \
\hline \text { Standard Hours Allowed for Output } & 39,000 \text { hours } \
\hline \text { Overapplied Overhead } & \$ 2,000 \
\hline
\end{array}$
What was the total amount of overhead applied to work in process in August?
A) $195,000.
B) $197,000.
C) $197,500.
D) $199,500.

Question

Quizplus · Accepted Answer

Total overhead applied = (Standard fixed overhead rate * Denominator activity) + (Standard variable overhead rate * Actual hours)= ($1.00 * 40,000) + ($4.00 * 39,500)= $40,000 + $158,000= $198,000Since there was $2,000 of overapplied overhead, the total overhead applied to work in process in August was $198,000 - $2,000 = $196,000.

Union Company Uses a Standard Cost Accounting System What Was the Total Amount of Overhead Applied to Work