Calculator eBook Show Me How Applying factory overhead Chart of Accounts Factory

Question

Calculator eBook Show Me How Applying factory overhead Chart of Accounts Factory Overhead Journal Instructions Bergan Company estimates that total factory overhead costs will be $620,000 for the year. Direct labor hours are estimated to be 80,000. Required: a. For Bergan Company, determine the predetermined factory overhead rate using direct labor hours as the activity base. b. During May, Bergan Company accumulated 2,500 hours of direct labor costs on Job 200 and 3,000 hours on Job 305. Determine the amount of factory overhead applied to Jobs 200 and 305 in May c. Prepare the journal entry on May 31 to apply factory overhead to both jobs in May according to the predetermined overhead rate. Refer to the Chart of Accounts for exact wording of account tities. b. Jounal c Prepare the joumal entry on May 31 to apply factory overhead to both jobs in May according to the predetermined overhead PAGE JOURNAL DATE POST. REF.DEBIT CREDIT Check My Work All work saved.

Explanation / Answer

Solution: a. $7.75 per direct labor hour Working Notes: Predetermined overhead rate = Estimated total factory overhead /Estimated Direct labor hours =$620,000/80,000 =$7.75 per direct labor hour b. $42,625 Working Notes: Factory Overhead applied = Direct labor hours incurred x Predetermined overhead rate Job 200 =2500 x 7.75 $19,375 Job 305 =3000 x 7.75 $23,250 Factory Overhead applied to Job 200 & 305 $42,625 [19,375+23,250] c. Date Description Debit Credit May 31 Work in process 42,625 Factory overhead 42,625 Working Notes: Amount is the as calculated in part B, the total factory overhead applied to both the jobs Please feel free to ask if anything about above solution in comment section of the question.

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