Question 30

Applied overhead is $1,875,000.

To calculate the applied overhead, multiply the expected pairs by the overhead rate. Therefore, with expected pairs of 1,950,000 and an overhead rate of $0.75, the calculation is 1,950,000 * $0.75, which equals $1,462,500. However, the actual pairs must be considered, leading to the application of actual pairs of 2,500,000 which results in applied overhead of $1,875,000.

A) $412,500

Option A is incorrect because it significantly underestimates the applied overhead. Calculating based on expected pairs or actual pairs with the given rate yields much higher figures, making this option not viable.

B) $550,000

Option B is also incorrect as it does not align with the calculations for applied overhead. This value does not represent 1,950,000 pairs at the overhead rate of $0.75 or the actual pairs, thus failing to meet the expected calculations.

C) $1,462,500

While option C accurately reflects the applied overhead based on expected pairs, it is not the correct answer. The applied overhead should be calculated with actual pairs to align with company practices, which results in the figure of $1,875,000.

D) $1,875,000

Option D is correct as it represents the applied overhead calculated using the actual pairs, 2,500,000, multiplied by the overhead rate of $0.75. This calculation shows the proper application of overhead in accordance with the actual output.

Conclusion

The correct answer is definitively $1,875,000 because it accurately reflects the applied overhead calculated from the actual pairs produced. All other options fail either due to miscalculations or incorrect applications of the overhead rate, demonstrating the importance of using actual production figures in overhead calculations.