Question

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 $632,970 $506,300 Estimated direct labor hours for year 8,300 Estimated machine hours for year 16,230 Actual factory overhead costs for March $50,770 $43,920 Actual direct labor hours for March 750 Actual machine hours for March 1,270 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 $

Answer 1

a
Factory 1	39 per machine hour	=632970/16230
b
Factory 2	61 per direct labor hour	=506300/8300
c
Factory 1	Work in Process	49530		=1270*39
	Factory Overhead		49530
Factory 2	Work in Process	45750		=750*61
	Factory Overhead		45750
d
Factory 1	1240	Debit Underapplied	=50770-49530
Factory 2	1830	Credit Overapplied	=45750-43920