River Company uses a standard-cost accounting system. It applies overhead based on direct labor hours. The following overhead costs and production data are available for March: What is the applied factory overhead for March? A. $137,500 B. $176,250 C. $178,750 D. $182,000
Answer (C) is correct . The applied factory overhead equals the standard input allowed for actual output multiplied by the total standard overhead rate per hour. 27,500 ¡Á ($5.00 VOH + $1.50 FOH) = $178,750 Answer (A) is incorrect because Standard variable overhead applied equals $137,500. Answer (B) is incorrect because Subtracting the $2,500 overhead variance results in $176,250. Answer (D) is incorrect because The amount of $182,000 is based on the actual DLH worked.