Applying Factory Overhead Hatch Company estimates that total factory overhead co

Question

Applying Factory Overhead Hatch Company estimates that total factory overhead costs will be $121,000 for the year. Direct labor hours are estimated to be 11,000. a. For Hatch Company, determine the predetermined factory overhead rate using direct labor hours as the activity base. per direct labor hour b. During May, Hatch Company accumulated 750 hours of direct labor costs on Job 200 and 540 hours on Job 305. Determine the amount of factory overhead applied to Jobs 200 and 305 in May. Feedback Y Check My Work a. Determine the rate by spreading the estimated overhead costs over the allocation base. b. Multiply the job hours by the predetermined overhead rate c. Prepare the journal entry to apply factory overhead to both jobs in May according to the predetermined overhead rate. Work in Process V Factory Overhead v

Explanation / Answer

(a)

Factory overhead cost = $121,000

Direct labor hours = 11,000

Predetermined factory overhead rate = Factory overhead cost/Direct labor hours

= 121,000/11,000

= $11 per labor hour

(b)

(c)

Factory overheads applied to boththe jobs = 8,250 + 5,940

= $14,190

Journal

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Job 200 Job 305 Labor hours (i) 750 540 Factory overhead rate (ii) $11 per labor hour $11 per labor hour Hence, factory overheads applied (i) x (ii) $8,250 $5,940

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