A manufacturer of playground equipment has a standard costing system based on standard direct labor-hours (DLHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below: Denominator level of activity $ 5,800 DLHs Fixed overhead cost $ 58,870 The following data pertain to operations for the most recent period: Actual hours 6,100 DLHs Standard hours allowed for the actual output 6,018 DLHs Actual total fixed manufacturing overhead cost $ 58,320 The fixed manufacturing overhead applied to products during the period is closest to__________.
a. $61,915
b. $61,083
c. $58,870
d. $58,320

This is the standard rate used for absorption; applying this to actual activity levels gives us the total fixed manufacturing overheads applied for the period.

Applied overhead = 10.15 * 6,100 (actual activity level) = $61,915

This is the amount that is charged and is over-absorbed by

Over-absorption = 61,915 - 58,320 = $3,595. This will be adjusted in the income statement.

Hope that helps.