Winston Company estimates that the factory overhead for the following year will be $1,135,600. The company has decided that the basis for applying factory overhead should be machine hours, which is estimated to be 33,400 hours. The total machine hours for the year were 54,900 hours. The actual factory overhead for the year was $1,893,000. Enter the amount as a positive number.
a. Determine the total factory overhead amount
applied. Round to the nearest dollar.
$
b. Compute the over- or underapplied amount for
the year.
$
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 = $1,135,600
Estimated machine hours = 33,400
Predetermined overhead rate = Estimated factory overhead / Estimated machine hours
= 1,135,600/33,400
= $34 per machine hour
Actual machine hours = 54,900
Factory overhead applied = Actual machine hours x Predetermined overhead rate
= 54,900 x 34
= $1,866,600
b.
Actual factory overhead = $1,893,000
Under applied factory overhead = Actual factory overhead- Factory overhead applied
= 1,893,000-1,866,600
= $26,400
c.
General Journal | Debit | Credit |
Cost of goods sold | $26,400 | |
Factory overhead | $26,400 | |
( To record under applied factory overhead) |
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