The chief cost accountant for Sassy Beverage Co. estimated that total factory ov
ID: 2445287 • Letter: T
Question
The chief cost accountant for Sassy Beverage Co. estimated that total factory overhead cost for the Blending Department for the coming fiscal year beginning June 1 would be $97,500, and total direct labor costs would be $75,000. During June, the actual direct labor cost totaled $6,300, and factory overhead cost incurred totaled $8,250. a. What is the predetermined factory overhead rate based on direct labor cost? Enter your answer as a whole percent not in decimals. b.Journalize the entry to apply factory overhead to production for June. c. What is the June 30 balance of the account Factory Overhead—Blending Department? d. Does the balance in part (c) represent overapplied or underapplied factory overhead?
Explanation / Answer
a. What is the predetermined factory overhead rate based on direct labor cost? Enter your answer as a whole percent not in decimals.
Predetermined factory overhead rate = Estimated total factory overhead cost/ direct labor costs
Predetermined factory overhead rate = 97500/75000
Predetermined factory overhead rate = $ 1.30 per direct labor cost
b.Journalize the entry to apply factory overhead to production for June.
Factory overhead applied = Predetermined factory overhead rate *actual direct labor cost
Factory overhead applied = 6300*1.30
Factory overhead applied = 8190
Journal Entry
c. What is the June 30 balance of the account Factory Overhead—Blending Department?
Factory Overhead—Blending Department = 8250 - 8190
Factory Overhead—Blending Department = $ 60
d. Does the balance in part (c) represent overapplied or underapplied factory overhead?
It underapplied factory overhead
Account Title & Explaination Debit Credit Work in Process 8190 Factory Overhead 8190Related Questions
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