The correct answer is D. $1,875,000 . Applied overhead is calculated by multiplying the predetermined overhead rate by the actual amount of the allocation base used during production. OpenStax explains that a predetermined overhead rate is established in advance and then applied to production using the actual activity level.
The formula is:
Applied overhead = Overhead rate × Actual production
Using the figures provided:
Applied overhead = $0.75 × 2,500,000 = $1,875,000
So the total amount of overhead applied is $1,875,000 . The “expected to be produced” amount helps establish or understand the rate, but once the rate is given, applied overhead is based on the actual production achieved , not the estimated quantity.
Option C, $1,462,500 , would result from multiplying the rate by the expected production of 1,950,000, which is not what the question asks. The question specifically asks for the applied overhead, which uses actual activity. Therefore, with 2,500,000 pairs produced at $0.75 per pair , the correct applied overhead is $1,875,000 , making Option D the correct answer.
