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Fixed Overhead Applied for a Manufacturer of Playground Equipment

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A manufacturer of playground equipment has a standard costing system based on direct labor-hours (DLHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below:

Denominator level of activity 8,100 DLHs
Fixed overhead cost 78,975

The following data pertain to operations for the most recent period:

Actual hours 8,300 DLHs
Standard hours allowed for the actual output 8,229 DLHs
Actual total fixed overhead cost 78,125

Reference: 11-15

How much fixed overhead was applied to products during the period to the nearest dollar?

80,233
78,125
78,975
80,925

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This solution shows the simple calculation for determining the fixed overhead applied.

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