Applying Factory Overhead Rothchild Company estimates that total factory overhea
ID: 2601647 • Letter: A
Question
Applying Factory Overhead
Rothchild Company estimates that total factory overhead costs will be $810,000 for the year. Direct labor hours are estimated to be 90,000.
a. For Rothchild Company, determine the predetermined factory overhead rate using direct labor hours as the activity base.
$ per direct labor hour
b. During August, Rothchild Company accumulated 3,500 hours of direct labor costs on Job 40 and 4,200 hours on Job 42. Determine the amount of factory overhead applied to Jobs 40 and 42 in August.
$
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c. Prepare the journal entry to apply factory overhead to both jobs in August according to the predetermined overhead rate.
Factory Overhead Rates, Entries, and Account Balance
Hudson Company operates two factories. The company applies factory overhead to jobs on the basis of machine hours in Factory 1 and on the basis of direct labor hours in Factory 2. Estimated factory overhead costs, direct labor hours, and machine hours are as follows:
a. Determine the factory overhead rate for Factory 1.
$ per machine hour
b. Determine the factory overhead rate for Factory 2.
$ per direct labor hour
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c. Journalize the entries to apply factory overhead to production in each factory for September.
Predetermined Factory Overhead Rate
Willies Engine Shop uses a job order cost system to determine the cost of performing engine repair work. Estimated costs and expenses for the coming period are as follows:
The average shop direct labor rate is $18 per hour.
Determine the predetermined shop overhead rate per direct labor hour. Round the answer to nearest whole cent.
$ per direct labor hour
Entries for Factory Costs and Jobs Completed
Munch Printing Inc. began printing operations on January 1. Jobs 301 and 302 were completed during the month, and all costs applicable to them were recorded on the related cost sheets. Jobs 303 and 304 are still in process at the end of the month, and all applicable costs except factory overhead have been recorded on the related cost sheets. In addition to the materials and labor charged directly to the jobs, $2,570 of indirect materials and $31,070 of indirect labor were used during the month. The cost sheets for the four jobs entering production during the month are as follows, in summary form:
Journalize the summary entry to record each of the following operations for January (one entry for each operation):
a. Direct and indirect materials used. For a compound transaction, if an amount box does not require an entry, leave it blank.
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b. Direct and indirect labor used. For a compound transaction, if an amount box does not require an entry, leave it blank.
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c. Factory overhead applied to all four jobs (a single overhead rate is used based on direct labor cost).
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d. Completion of Jobs 301 and 302.
Work in Process Factory OverheadExplanation / Answer
As per policy, only one question is allowed to answer, so Answering "Applying Factory Overhead" :
1) Applying Factory Overhead:
a. Pre-determined Factory Overhead rate = Total Factory Overhead / Direct Labor Hours = 810000 / 90000 = $9/DLH
b. Factory overhead applied on Job 40 & 42 = total direct labor hours applied * Pre-determined rate
= (3500 + 4200) DLHs * $9 per DLH = $69300
c. Journal Entry :
Date Accounts Titles Debit $ Credit $ WIP 69300 Factory Overhead 69300Related Questions
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