The Winston Company estimates that the factory overhead for the following year w

Question

The Winston Company estimates that the factory overhead for the following year will be $1,216,000. The company has decided that the basis for applying factory overhead should be machine hours, which is estimated to be 38,000 hours. The total machine hours for the year was 54,900. The actual factory overhead for the year was $1,746,000.

Required:

Chart of Accounts

Factory Overhead

(a) Determine the total factory overhead amount applied.

(b) Calculate the overapplied or underapplied amount for the year. Enter the amount as positive values.

General Journal

(c) Prepare the journal entry to close Factory Overhead into Cost of Goods Sold on December 31. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 1

JOURNAL

1

2

(a) Determine the total factory overhead amount applied. (b) Calculate the overapplied or underapplied amount for the year. Enter the amount as positive values. (c) Prepare the journal entry to close Factory Overhead into Cost of Goods Sold. Refer to the Chart of Accounts for exact wording of account titles.

Explanation / Answer

Predetermined Overhead rate per machine hour = Estimated Overhead / estimated Machine hours

= 1216,000 / 38000 = 32 per hour

Question - (a) Determine the total factory overhead amount applied.

In the above calculation 32 per hour means, for each actual hour we work in the factory, $32 overhead shall be applied. It was given that 54,900 hours were actually worked in that year.

Factory overhead applied = 32 * 54900 = 1756,800

Question - (b) Calculate the overapplied or underapplied amount for the year. Enter the amount as positive values.

As against actual overhead of 1746,000 we applied overhead of 1756,800 as factory overhead.

So Factory overhead over-applied = 1756,800 - 1746,000 = 10,800

Question - (c)

Post.Ref ......... can be left blank. Generally it for posting the page number of the ledger where the journal will be posted.

Your rating helps me .......... thank you

Date Description Post.Ref Debit Credit Dec 31 Factory Overhead 10800 Cost of goods sold    10800

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.