Question

Kaplan Consulting applies overhead to client accounts based on direct labor hours. For the month of October, the company estimated overhead costs to be $9,000 based on estimated direct labor hours of 1,000. The company actually incurred 900 direct labor hours and $7,200 of overhead. If Kaplan uses a normal costing system, how much overhead was applied in October

Answer 1

the overhead applied is $8,100

Step-by-step explanation:

The computation of the overhead applied is shown below:

But before that the predetermined overhead rate is

= $9,000 ÷ 1,000 direct labor hours

= $9 per direct labor hour

Now the applied overhead is

= 900 direct labor hours × $9

= $8,100

Hence, the overhead applied is $8,100