What was the applied fixed overhead in the provided data?

What was the applied fixed overhead in the provided data?

• A. $20,000
• B. $21,000
• C. $23,000
• D. $24,000

Answer: (D)

Applied fixed overhead is the amount of fixed overhead allocated to production using a predetermined overhead rate times the actual activity level. You determine this rate at the budget stage (budgeted fixed overhead divided by budgeted activity) and then apply it to the actual activity to assign overhead to products. In the data given, applying that rate to the actual activity produces the value identified by the final option, which is why that choice is correct.

Applied fixed overhead is the amount of fixed overhead allocated to production using a predetermined overhead rate times the actual activity level. You determine this rate at the budget stage (budgeted fixed overhead divided by budgeted activity) and then apply it to the actual activity to assign overhead to products. In the data given, applying that rate to the actual activity produces the value identified by the final option, which is why that choice is correct.