The Murray Corporation uses a standard cost system in which it applies manufacturing overhead on the basis of standard direct labor-hours (DLHs). The company recorded the following activity and cost data for May: The amount of fixed manufacturing overhead cost applied during May was:
A)$52,535
B)$54,135
C)$36,090
D)$50,400

Question

The Murray Corporation uses a standard cost system in which it applies manufacturing overhead on the basis of standard direct labor-hours (DLHs). The company recorded the following activity and cost data for May:  The amount of fixed manufacturing overhead cost applied during May was:
A)$52,535 
B)$54,135 
C)$36,090 
D)$50,400

Quizplus · Accepted Answer

The fixed manufacturing overhead cost rate ($541,350 ÷ 15,900 DLHs) is $34 per DLH. The actual DLHs used in May were 1,600, so the fixed manufacturing overhead cost applied is:
$34 per DLH × 1,600 DLHs = $54,400
Therefore, the correct choice is B)$54,135, which is the closest to the calculated amount.

The Murray Corporation Uses a Standard Cost System in Which