Question

Elite, Inc. has estimated total factory overhead costs of $900,000, and 25,000 direct labor hours for the current fiscal year. If the direct labor hours for Job N41 is 2,000, calculate the total factory overhead applied to this job.

a.$4,000

b.$72,000

c.$40,000

d.$25,000

Answer 1

Ans.	Option   b   $72,000
	*First of all, we need to calculate the predetermined overhead rate.
	Predetermined overhead rate = Estimated factory overhead cost / Estimated direct labor hours
	$900,000 / 25,000
	$36 per direct labor hour
	*Now we can calculate the applied overhead amount by the following way:
	Overhead applied = Actual direct labor hours * Predetermined overhead rate
	2,000 * $36
	$72,000