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Factory overhead rates, entries and account balance Sundance Solar Company operates two lactones. The company applies factory overhead to jobs oil 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: Factory 1 Factory 2 Estimated factory overhead cost for fiscal year beginning March 1 $12,900.000 $10,200,000 Estimated direct labor hours for year 250,000 Estimated machine hours for year 600,000 Actual factory overhead costs for March $1 2,990,000 $10,090,000 Actual direct labor hours for March 245,000 Actual machine hours for March 610,000 a. Determine the factory overhead rate for Factory 1. b. Determine the factory overhead rate for Factory 2. c. Journalize the entries to apply factory overhead to production in each factory for March. d. Determine the balances of the factory overhead accounts for each factory as of March 31 and indicate whether the amounts represent over- or underapplied factory overhead.

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 19.8EX
Textbook Problem

Factory overhead rates, entries and account balance

Sundance Solar Company operates two lactones. The company applies factory overhead to jobs oil 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:

  Factory 1 Factory 2
Estimated factory overhead cost for fiscal year beginning March 1 $12,900.000 $10,200,000
Estimated direct labor hours for year   250,000
Estimated machine hours for year 600,000  
Actual factory overhead costs for March $1 2,990,000 $10,090,000
Actual direct labor hours for March   245,000
Actual machine hours for March 610,000  

a. Determine the factory overhead rate for Factory 1.

b. Determine the factory overhead rate for Factory 2.

c. Journalize the entries to apply factory overhead to production in each factory for March.

d. Determine the balances of the factory overhead accounts for each factory as of March 31 and indicate whether the amounts represent over- or underapplied factory overhead.

Expert Solution

(a)

To determine

Factory overhead

It includes all manufacturing costs except direct material cost and direct labor cost. Factory overhead cost includes all costs like indirect materials, indirect labor, factory power and factory depreciation.

Applied factory overhead

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 factory overhead rate for Factory 1.

Explanation of Solution

The factory overhead rate for factory 1 is calculated as follows:

Factory overhead rate = Estimated total factory overhead costsEstimated machine hours=$12

Expert Solution

(b)

To determine
the factory overhead rate for Factory 2.

Expert Solution

(c)

To determine

To record: Journal entry the factory overhead applied in the books of T Industries.

Expert Solution

(d)

To determine
the balance of factory overhead accounts for each factory as of March 31 & indicate under or over-applied factory overhead.

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Chapter 19 Solutions

Accounting
Show all chapter solutions
Ch. 19 - Issuance of materials On May 7, Bergan Company...Ch. 19 - Issuance of materials On August 4, Rothchild...Ch. 19 - Direct labor costs During May, Bergan Company...Ch. 19 - Direct labor costs During August, Rothchild...Ch. 19 - Factory overhead costs During May, Bergan Company...Ch. 19 - Factory overhead costs During August, Rothchild...Ch. 19 - Applying factory overhead Bergan Company estimates...Ch. 19 - Applying factory overhead Rothchild Company...Ch. 19 - Job costs At the end of May, Bergan Company had...Ch. 19 - Job costs At the end of August, Rothchild Company...Ch. 19 - Transactions in a job order cost system Five...Ch. 19 - Cost of materials issuances under the FIFO method...Ch. 19 - Entry for issuing materials Materials issued for...Ch. 19 - Entries for materials GenX Furnishings...Ch. 19 - Entry for factory labor costs A summary of the...Ch. 19 - Entry for factory labor costs The weekly time...Ch. 19 - Entries for direct labor and factory overhead...Ch. 19 - Factory overhead rates, entries and account...Ch. 19 - Predetermined factory overhead rate Street....Ch. 19 - Predetermined factory overhead rate Poehling...Ch. 19 - Entry for jobs completed; cost of unfinished jobs...Ch. 19 - Entries for factory costs and jobs completed Old...Ch. 19 - Financial statements of a manufacturing firm The...Ch. 19 - Decision making with job order costs Alvarez...Ch. 19 - Decision making with job order costs Raneri...Ch. 19 - Job order cost accounting for a Service company...Ch. 19 - Job order cost accounting for a service company...Ch. 19 - Entries for costs in a job order cost system...Ch. 19 - Entries and schedules for unfinished jobs and...Ch. 19 - Job order cost sheet Remnant Carpet Company sells...Ch. 19 - Analyzing manufacturing cost accounts Fire Rock...Ch. 19 - Flow of costs and income statement Ginocera Inc....Ch. 19 - Entries for costs in a job order cost system Royal...Ch. 19 - Entries and schedules for unfinished Jobs and...Ch. 19 - Job order cost sheet Stretch and Trim Carpet...Ch. 19 - Analyzing manufacturing cost accounts Clapton...Ch. 19 - Flow of costs and income statement Technology...Ch. 19 - Communication TAC Industries sells heavy equipment...Ch. 19 - Predetermined overhead rates As an assistant cost...Ch. 19 - Communication Carol Creedence, the plant manager...Ch. 19 - Job order decision making and rate deficiencies...Ch. 19 - Recording manufacturing costs Todd Lay just began...

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