Winston Company estimates that the factory overhead for the following year will be $916,800. The company has decided that the basis for applying factory overhead should be machine hours, which is estimated to be 38,200 hours. The total machine hours for the year were 54,500. The actual factory overhead for the year was $1,300,000.
a. Determine the total factory overhead amount applied. Round to
the nearest dollar.
$
b. Compute the over- or underapplied amount for the year. Enter
the amount as a positive number.
$
c. Journalize the entry to transfer the over- or underapplied factory overhead to cost of goods sold. If an amount box does not require an entry, leave it blank.
a.
Estimated factory overhead = $916,800
Estimated machine hours = 38,200
Predetermined overhead rate = Estimated factory overhead/ Estimated machine hours
= 916,800/38,200
= $24 per machine hour
Actual machine hours = 54,500
Factory overhead applied = Actual machine hours x Predetermined overhead rate
= 54,500 x 24
= $1,308,000
b.
Actual factory overhead = $1,300,000
Over applied factory overhead = Factory overhead applied - Actual factory overhead
= 1,308,000-1,300,000
= $8,000
c.
General Journal | Debit | Credit |
Factory overhead | $8,000 | |
Cost of goods sold | $8,000 | |
( To close over applied factory overhead cost) |
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