Question

# Factory Overhead Rates, Entries, and Account Balance Sundance Solar Company operates two factories. The company applies...

Factory Overhead Rates, Entries, and Account Balance

Sundance Solar 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:

 Factory 1 Factory 2 Estimated factory overhead cost for fiscal year beginning March 1 \$661,080 \$897,600 Estimated direct labor hours for year 13,600 Estimated machine hours for year 23,610 Actual factory overhead costs for March \$52,810 \$77,300 Actual direct labor hours for March 1,220 Actual machine hours for March 1,840

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

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

 Factory 1 Factory 2

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

 Factory 1 \$ Factory 2 \$

a. Determine the factory overhead rate for Factory 1.
\$661080/23610 = 28 per machine hour

b. Determine the factory overhead rate for Factory 2.
\$897600/13600 = 66 per direct labor hour

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

 Factory 1 Work in process (1840*28) 51520 Factory overhead 51520 Factory 2 Work in process (1220*66) 80520 Factory overhead 80520

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

 Factory 1 \$51520-52810 = 1290 Under applied Factory 2 \$80520-77300 =3220 Over applied

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