Exercise 18-4 Factory Overhead Rate, Entry for Applying Factory Overhead, and Fa

Question

Exercise 18-4 Factory Overhead Rate, Entry for Applying Factory Overhead, and Factory Overhead Account Balance The chief cost accountant for Dr. Cinnamon Beverage Co. estimated that total factory overhead cost for the Blending Department for the coming fiscal year beginning April 1 would be $106,800, and total direct labor costs would be $89,000. During April, the actual direct labor cost totaled $7,500, and factory overhead cost incurred totaled $9,150. Hint(s) a. What is the predetermined factory overhead rate based on direct labor cost? Enter your answer as a whole percent not in decimals. % Hide Feedback Correct Additional Feedback Divide the total estimated factory overhead by the total direct labor cost. Hint(s) Hide b. Journalize the entry to apply factory overhead to production for April. Hide Feedback Partially Correct Additional Feedback Multiply the actual labor cost by the predetermined rate. Increase the work in process account and decrease the factory overhead account. c. What is the April 30 balance of the account Factory Overhead

Explanation / Answer

Part A $546,000 / $420,000 = $1.30 of overhead per each direct labor dollar Part B Debit Work in Process $46,800 ($1.30 x 36,000) Credit Factory Overhead - Blending Department $46,800 Part C $45,000 incurred - $46,800 applied = ($1,800) credit balance (over-applied)

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