Question

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

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 \$665,260 \$1,020,000 Estimated direct labor hours for year 15,000 Estimated machine hours for year 22,940 Actual factory overhead costs for March \$53,210 \$88,130 Actual direct labor hours for March 1,350 Actual machine hours for March 1,790

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

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a-b. Factory 1 overhead is applied based on machine hours. Factory 2 overhead is applied based on direct labor hours.

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

 Factory 1 Work in Process -------- Factory Overhead --------- Factory 2 Work in Process -------- Factory Overhead --------

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 \$ Credit Overapplied Factory 2 \$ Debit Underapplied

 Factory 1 Factory 2 Estimated OH \$ 665,260.00 \$ 1,020,000.00 Estimated MHs 22940 Estimated DLHs 15000 Factory OH rate \$           29.00 \$              68.00 (a) (b)
 c) Particulars Debit Credit Factory 1 Work in Process \$ 51,910.00 To Factory OH \$ 51,910.00 (\$ 29 x 1790) Factory 2 Work in Process \$ 91,800.00 To Factory OH \$ 91,800.00 (\$ 68 x 1350)
 d) Particulars Factory 1 Factory 2 Actual OH \$ 53,210.00 \$ 88,130.00 Applied OH \$ 51,910.00 \$ 91,800.00 Overapplied/ (Underapplied) \$ (1,300.00) \$   3,670.00 (Debit) (Credit)

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