Question

Spartan Corporation estimates that it will incur $200,000 of total manufacturing overhead cost at an estimated activity level of 10,000 direct labor-hours. What is the amount of manufacturing overhead that would be applied to a job that required 200 direct labor-hours?
a. $2,000.
b. $4,000.
c. $6,000.
d. $10,000.

Answer 1

Answer:

Spartan Corporation

The amount of manufacturing overhead that would be applied to a job that required 200 direct labor-hours is:

b. $4,000.

Explanation:

a) Data and Calculations:

Estimated manufacturing overhead = $200,000

Estimated activity level = 10,000 direct labor-hours

Predetermined overhead rate = $20 ($200,000/10,000) per direct labor-hour

Applied overhead to a job that required 200 direct labor-hours = $4,000 (200 * $20)