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? |
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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