Overhead Cost Is Applied to Units Based on Direct Labour

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.

Correct Answer:

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