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10 May, 07:18

Spartan Corporation estimates that it will incur $200,000 of total manufacturing overhead cost at an estimated activity level of 10,000 direct labor-hours. What is the amount of manufacturing overhead that would be applied to a job that required 200 direct labor-hours? A. $2,000B. $4,000C. $6,000D. $10,000

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  1. 10 May, 10:44
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    B. $4,000

    Explanation:

    The total manufacturing cost in management accounting is usually a function of a variable element such as labor hours, machine hours, direct raw materials etc.

    There is a direct proportion relationship between the manufacturing overhead cost and direct labor-hours.

    Given that Spartan Corporation estimates that it will incur $200,000 of total manufacturing overhead cost at an estimated activity level of 10,000 direct labor-hours.

    At an activity level of 200 direct labor hours

    $200,000/10,000 = x/200

    x = $4,000

    where x is the amount of manufacturing overhead that would be applied to a job that required 200 direct labor-hours
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