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A single factory wide rate of $182 per direct labour hour is in use and Job 1 consumes 210 direct labour hours. How much factory overhead is applied to Job 1?
A$16,380
B$20,925
C$38,220
D$38,625
Answer & Solution
Correct answer: C. $38,220
1. Under a single factory wide rate, overhead applied equals hours used multiplied by the one rate.
2. Job 1 uses 210 direct labour hours and the rate is $182 per hour.
3. 210 hours times $182 gives $38,220 of factory overhead applied to Job 1.
4. $16,380 is the amount applied to Job 2, which uses the other 90 of the 300 hours.
5. $38,625 is the Job 1 figure produced by departmental rates, not by the single rate.
_Source: Jonick, Principles of Managerial Accounting (UNG Press, CC BY-SA 4.0), section 4.2 Single Factory Rate to Estimate Factory Overhead_
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