 # Applying factory overhead Bergan Company estimates that total factory overhead costs will be $620,000 for the year. Direct labor hours are estimated to be 80,000. For Bergan Company, (a) determine the predetermined factory overhead rate using direct labor hours as the activity base, (b) determine the amount of factory overhead applied to Jobs 200 and 305 in May using the data on direct labor hours from Practice Exercise 19-2A, and (c) prepare the journal entry to apply factory overhead to both jobs in May according to the predetermined overhead rate. BuyFind ### Accounting 27th Edition WARREN + 5 others Publisher: Cengage Learning, ISBN: 9781337272094 BuyFind ### Accounting 27th Edition WARREN + 5 others Publisher: Cengage Learning, ISBN: 9781337272094 #### Solutions Chapter Section Chapter 19, Problem 19.4APE Textbook Problem ## Applying factory overheadBergan Company estimates that total factory overhead costs will be$620,000 for the year. Direct labor hours are estimated to be 80,000. For Bergan Company, (a) determine the predetermined factory overhead rate using direct labor hours as the activity base, (b) determine the amount of factory overhead applied to Jobs 200 and 305 in May using the data on direct labor hours from Practice Exercise 19-2A, and (c) prepare the journal entry to apply factory overhead to both jobs in May according to the predetermined overhead rate.

Expert Solution

a)

To determine

Normally, factory overhead costs are applied or allocated to cost of job based on predetermined factory overhead rate. The formula to calculate the predetermined factory overhead rate is as follows:

Predetermined factory overhead rate = Estimated total factory overhead costsEstimated activity rate

To determine: the predetermined factory overhead rate of Company B.

### Explanation of Solution

The predetermined factory overhead rate is calculated as follows:

Predetermined factory overhead rate = Estimated total factory overhead costsEstimated direct labor hours=\$<

Expert Solution

(b)

To determine

The company applies factory overhead using predetermined factory overhead rate. The factory overhead applied is recorded in each job sheet which consists of direct labor hour and predetermined overhead rate.

To determine: the amount of factory overhead applied to Jobs 200 and 305 in May.

Expert Solution

(c)

To determine

To record: Journal entry the factory overhead applied in the books of Company B.

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