The following information is provided for the year. Actual direct labour hours worked55,000Budgeted overhead$840,000Budgeted direct labour hours60,000Actual overhead costs incurred$790,000If normal costing is used, the amount of overhead applied for the year would be:Question 3Select one:a.$840,000b.$770,000c.$705,650d.$790,000
Question
The following information is provided for the year. Actual direct labour hours worked55,000Budgeted overhead790,000If normal costing is used, the amount of overhead applied for the year would be:Question 3Select one:a.770,000c.790,000
Solution
To calculate the overhead applied for the year using normal costing, we first need to calculate the predetermined overhead rate. This is done by dividing the budgeted overhead by the budgeted direct labor hours.
Step 1: Calculate the predetermined overhead rate Predetermined Overhead Rate = Budgeted Overhead / Budgeted Direct Labor Hours Predetermined Overhead Rate = 14 per hour
Step 2: Calculate the overhead applied Overhead Applied = Predetermined Overhead Rate * Actual Direct Labor Hours Overhead Applied = 770,000
So, the amount of overhead applied for the year would be 770,000.
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