Question

Norin Corp. has a budgeted normal annual capacity of 440,000 units with production rates being level throughout the year. The January budget shows fixed factory overhead of $13,200 and an estimated variable factory overhead rate of $2.10 per unit. During January, actual output was 12,300 units, with a total factory overhead of $27,000.

How much is the applied factory overhead cost?

A) $26,199
B) $27,000
C) $45,258
D) $30,258

Answer 1

The applied factory overhead cost for Norin Corp. is calculated by adding the fixed factory overhead to the product of the variable factory overhead rate and the actual output, resulting in $39,030, which does not match any of the given options.

Step-by-step explanation:

The question is asking to calculate the applied factory overhead cost for Norin Corp. for the month of January. To find this, we use the budgeted rates and expected production levels to determine what the overhead costs should be, based on actual output. The fixed factory overhead is given as $13,200, and this cost does not change with the level of production. The variable factory overhead rate is $2.10 per unit. Since the actual output during January was 12,300 units, the applied factory overhead cost can be calculated as follows:

Applied Factory Overhead = Fixed Overhead + (Variable Overhead Rate × Actual Output)

Applied Factory Overhead = $13,200 + ($2.10 × 12,300)

Applied Factory Overhead = $13,200 + $25,830

Applied Factory Overhead = $39,030

The answer is not listed in the options provided, which suggests there may be an error in the question or in the choices given. Based on the information supplied, the correct applied factory overhead cost is $39,030, not any of the options A) $26,199 B) $27,000 C) $45,258 D) $30,258.