Question

Factory Overhead Rate, Entry for Applying Factory Overhead, and Factory Overhead Account Balance The 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 $3,000,000, and total direct labor costs would be $2,400,000. During May, the actual direct labor cost totaled $198,400, and factory overhead cost incurred totaled $253,200.

a. What is the predetermined factory overhead rate based on direct labor cost? Enter your answer as a whole percent not in decimals.

b. Journalize the entry to apply factory overhead to production for May.

c. What is the May 31 balance of the account Factory Overhead—Blending Department?

Amount:	$
Debit or Credit?

d. Does the balance in part (c) represent overapplied or underapplied factory overhead?

Answer 1

ANSWER :-

A. Calculation of predetermined factory overhead rate based on direct labor cost :-

Predetermined overhead rate = Total factory overhead / total direct labor cost

= 3,000,000/ 24,00,000

= 125%

(B )JOURNAL ENTRY :-

Work in process a/c Dr 248,000 (198,400*125%)

To Factory overhead A/c 248,000

C. May 31 balance of the account Factory overhead - blending department :-

Amount ( 253,200 - 248,000) = 5,200 (Debit)

D. The balance in part C represents ''underapplied'' factory overhead.

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