Expected pairs 1,950,000; actual pairs 2,500,000; overhead rate $0.75. What is applied overhead?

Rationale

Applied overhead is $1,875,000.

To calculate applied overhead, multiply the actual number of pairs produced by the overhead rate. In this case, 2,500,000 pairs multiplied by $0.75 gives an applied overhead of $1,875,000.

A ($412,500) YOUR ANSWER

This figure results from multiplying the expected pairs (1,950,000) by the overhead rate of $0.75, which yields $1,462,500. However, this does not reflect the actual number of pairs produced, which is necessary for calculating applied overhead.

B ($550,000) YOUR ANSWER

This option does not align with the calculations based on either the expected or actual pairs. It appears to be a random figure that does not derive from the provided data, specifically lacking a basis in the multiplication of pairs and the overhead rate.

C ($1,462,500) YOUR ANSWER

This value represents the applied overhead based on the expected pairs of 1,950,000 multiplied by the overhead rate of $0.75. While it is a valid calculation, it does not use the actual pairs produced, which is essential for determining the correct applied overhead.

D ($1,875,000) CORRECT

This value is correct, as it is calculated by multiplying the actual pairs (2,500,000) by the overhead rate of $0.75, resulting in the applied overhead of $1,875,000. This calculation accurately reflects the costs associated with the actual production output.

Conclusion

In summary, applied overhead must be calculated using the actual production figures to accurately reflect incurred costs. The correct amount, derived from multiplying the actual pairs produced by the overhead rate, is $1,875,000. Other choices either misinterpret the expected pairs or do not use the actual production data, leading to incorrect conclusions.

Expected pairs 1,950,000; actual pairs 2,500,000; overhead rate $0.75. What is applied overhead?

Applied overhead is $1,875,000.

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