Final answer:
To find the factory overhead applied in January, we divide the estimated total factory overhead costs by the estimated total direct labor costs to get the predetermined overhead rate. We then multiply this rate by the actual direct labor costs in January. The result indicates that the actual overhead applied is $252,000, which does not match any of the options provided.
Step-by-step explanation:
The question involves calculating the amount of factory overhead applied to production for the month of January. To find this, we need to determine the predetermined overhead rate by dividing the estimated total factory overhead costs by the estimated total direct labor costs. This gives us the rate at which overhead is applied based on the direct labor costs.
- Estimated total factory overhead costs = $4,893,000
- Estimated total direct labor costs = $2,330,000
- Actual direct labor costs in January = $120,000
First, calculate the overhead rate:
Predetermined overhead rate = Estimated total factory overhead costs / Estimated total direct labor costs
Predetermined overhead rate = $4,893,000 / $2,330,000
Predetermined overhead rate = 2.1 (rounded to one decimal place)
Now, apply this rate to the actual direct labor costs in January:
Overhead applied in January = Predetermined overhead rate * Actual direct labor costs in January
Overhead applied in January = 2.1 * $120,000
Overhead applied in January = $252,000
Therefore, the correct answer to the question is not among the provided options (a. $40,000, b. $48,000, c. $56,000, d. $64,000).