The Adlake Corporation makes and sells a single product and uses a standard cost system.During October,the company budgeted $300,000 in manufacturing overhead cost at a denominator activity of 20,000 machine-hours.At standard,each unit of finished product requires 5 machine-hours.The following cost and activity were recorded during October: The amount of overhead cost that the company applied to work in process for October was:
A)$279,300
B)$291,330
C)$294,000
D)$285,000

Question

The Adlake Corporation makes and sells a single product and uses a standard cost system.During October,the company budgeted $300,000 in manufacturing overhead cost at a denominator activity of 20,000 machine-hours.At standard,each unit of finished product requires 5 machine-hours.The following cost and activity were recorded during October:  The amount of overhead cost that the company applied to work in process for October was:
A)$279,300 
B)$291,330 
C)$294,000 
D)$285,000

Quizplus · Accepted Answer

Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $300,000 ÷ 20,000 machine-hours = $15 per machine-hour
Overhead applied = Predetermined overhead rate × Standard hours allowed for the actual output
= $15 per machine-hour × (3,800 units × 5 machine-hours per unit)
= $15 per machine-hour × (19,000 machine-hours)
= $285,000

The Adlake Corporation Makes and Sells a Single Product and Uses