Question

Cavy Company estimates that total factory overhead costs will be $733,460 for the year. Direct labor hours are estimated to be 91,000.

Required: (a) Determine the: (1) Predetermined factory overhead rate

(2) Amount of factory overhead applied to Job 567 if the amount of direct labor hours is 1,400 and Job 999 if the amount of direct labor hours is 2,900

(b) Prepare the journal entry to apply factory overhead for April according to the predetermined overhead rate. Refer to the Chart of Accounts for exact wording of account titles.

(a)(1) Determine the predetermined factory overhead rate. Round your answer to the nearest whole dollar.

Predetermined factory overhead rate

per direct labor hour

(a)(2) Determine the amount of factory overhead applied to Job 567 if the amount of direct labor hours is 1,400 and Job 999 if the amount of direct labor hours is 2,900.

Job 567:
Job 999:

Answer 1

1)Predetermined factory overhead rate =Estimated overhead /Estimated Direct labor hours

                               = 733460/91000

                              = $ 8.06 per DLH

2)

Job	Actual direct labor hours	Overhead applied
567	1400	1400*8.06= 11284
999	2900	2900*8.06= 23374
Total overhead applied		34658

b)

Date	Account title	Debit	credit
	Work in process inventory	34658
	Factory overhead		34658