Overhead Cost Is Applied to Units Based on Direct Labour

question 98

Multiple Choice

Overhead cost is applied to units based on direct labour hours.For April,total overhead cost was budgeted at $80,000 based on a denominator activity level of 20,000 direct labour hours for the month.The standard cost card indicates that each unit of finished product requires 2 direct labour hours.The following data are available for April's activity:
$\begin{array}{|l|r|}\hline \text { Number of Units Produced } & \$ 9,500 \\\hline \text { Direct Labour Hours Worked } & \$ 19,500 \\\hline \text { Actual Total Overhead Cost Incurred } & \$ 79,500 \\\hline\end{array}$
What was the amount of total overhead cost applied to production for the month of April?

• A) $76,000.
• B) $78,000.
• C) $79,500.
• D) $80,000.

---

Definitions:

Sporadic Pairing

Irregular or occasional associations between two factors or variables, not following a predictable pattern.

Unconditioned Response

An automatic, natural reaction to a stimulus that occurs without any need for learning.

Vicarious Response

A reaction experienced in response to observing another person's experiences or emotions.

Learning

The acquisition of knowledge, skills, values, or behaviors through study, experience, or teaching.