Question

# 1. Factory Overhead Rates, Entries, and Account Balance Sundance Solar Company operates two factories. The company...

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.

 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

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