Final answer:
To find the overhead applied in a standard cost system, we calculate the predetermined overhead rate and then apply it to the standard machine-hours. The total budgeted overhead of $150,000 divided by the estimated machine-hours results in a rate of $7.50 per hour, which multiplied by the standard hours of 18,000 gives an applied overhead of $135,000.
Step-by-step explanation:
To calculate the amount of overhead applied, we use the predetermined overhead rate based on the standard machine hours for the actual production. In a standard cost system, overhead is typically applied based on a rate derived from budgeted amounts. Here, both fixed and variable overheads contribute to the total overhead costs.
Firstly, we combine the budgeted variable overhead and budgeted fixed overhead to obtain the total budgeted overhead:
- Budgeted variable overhead: $100,000
- Budgeted fixed overhead: $50,000
- Total budgeted overhead: $100,000 + $50,000 = $150,000
The estimated total machine-hours is provided as the basis for applying overhead, which is 20,000 hours. Therefore, the predetermined overhead rate per machine-hour is calculated by dividing the total budgeted overhead by the total estimated machine-hours:
- Predetermined overhead rate = $150,000 / 20,000 hours
- Predetermined overhead rate = $7.50 per machine-hour
Next, we apply the predetermined rate to the standard machine-hours for actual production:
- Standard machine-hours for actual production: 18,000 hours
- Overhead applied = 18,000 hours × $7.50 per machine-hour
- Overhead applied = $135,000
None of the answer choices match exactly, so it is likely that there may have been a misinterpretation of the question, or there could be additional information not provided.