Question

The chief cost accountant for Kenner Beverage Co. estimated that total factory overhead cost for the...

The chief cost accountant for Kenner Beverage Co. estimated that total factory overhead cost for the Blending Department for the coming fiscal year beginning May 1 would be $140,000 and total direct labor costs would be $100,000. During May, the actual direct labor cost totaled $13,500 and factory overhead cost incurred totaled $19,200.

Required:

A. What is the predetermined factory overhead rate based on direct labor cost?
B. On May 31, journalize the entry to apply factory overhead to production. Refer to the Chart of Accounts for exact wording of account titles.
C. What is the May 31 balance of the account Factory Overhead-Blending Department?
D. Does the balance in part C represent over- or underapplied factory overhead?

Homework Answers

Answer #1
A) Predetermined overhead rate
Estimated factory overhead/estimated direct labor cost
140,000/100,000
140%
B) Journal Entry
Date Account titles & Explanations Debit Credit
31-May Work in process inventory 18900
Factory overhead 18,900
(13,500*140%)
C) Factory overhead
Actual overhead 19,200 Applied overhead 18,900
Balance 300
May 31 balance is 300
D) The May 31 balance represent under applied overhead
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