Question

1.

Factory Overhead Rates, Entries, and Account Balance

Sundance Solar Company operates two factories. The company applies factory overhead to jobs on the basis of machine hours in Factory 1 and on the basis of direct labor hours in Factory 2. Estimated factory overhead costs, direct labor hours, and machine hours are as follows:

		Factory 1		Factory 2
Estimated factory overhead cost for fiscal
	year beginning March 1	$748,020		$1,006,200
Estimated direct labor hours for year				12,900
Estimated machine hours for year		17,810
Actual factory overhead costs for March		$59,840		$86,860
Actual direct labor hours for March				1,160
Actual machine hours for March		1,390

a. Determine the factory overhead rate for Factory 1.
$ per machine hour

b. Determine the factory overhead rate for Factory 2.
$ per direct labor hour

c. Journalize the entries to apply factory overhead to production in each factory for March.

Factory 1
Factory 2

d. Determine the balances of the factory overhead accounts for each factory as of March 31, and indicate whether the amounts represent overapplied factory overhead or underapplied factory overhead.

Factory 1	$
Factory 2	$

2.

Entries for Direct Labor and Factory Overhead

Townsend Industries Inc. manufactures recreational vehicles. Townsend uses a job order cost system. The time tickets from November jobs are summarized as follows:

Job 201	$3,620
Job 202	1,810
Job 203	1,430
Job 204	2,660
Factory supervision	1,240

Factory overhead is applied to jobs on the basis of a predetermined overhead rate of $30 per direct labor hour. The direct labor rate is $14 per hour.

If required, round final answers to the nearest dollar.

a. Journalize the entry to record the factory labor costs. If an amount box does not require an entry, leave it blank.

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

Answer 1

1
a
Factory overhead rate for Factory 1	42	per machine hour	=748020/17810
b
Factory overhead rate for Factory 2	78	per direct labor hour	=1006200/12900
c
Factory 1 :
Work in Process	58380		=1390*42
Factory overhead		58380
Factory 2 :
Work in Process	90480		=1160*78
Factory overhead		90480
d
Factory 1	1460	Debit   Underapplied	=59840-58380
Factory 2	3620	Credit   Overapplied	=90480-86860

2
Work in Process	9520		=3620+1810+1430+2660
Factory overhead	1240
Wages payable		10760
Work in Process	20400		=(9520/14)*30
Factory overhead		20400