BE 2-4 Applying factory overhead Obj. 2 the Bergan Company estimates that total

Question

BE 2-4 Applying factory overhead Obj. 2 the Bergan Company estimates that total factory overhead costs will be $620,000 for year. Direct labor hours are estimated to be 80,000. For Bergan Company, (A) determine the predetermined factory overhead rate using direct labor hours as the activity base (B) determine the amount of factory overhead applied to Jobs 200 and 305 in May the data on direct labor hours from BE 2-2, and (C) prepare the journal en- try to apply factory overhead to both jobs in August according to the predetermined overhead rate. using

Explanation / Answer

A) calculation of Predetermined Overhead rate using direct labour hour Predetermined Overhead rate = Total Factory Overhead Total Direct Labour Hours Predetermined Overhead rate = $620000/80000 = $7.75 B ) Calculation of factory overhead applied to Jobs Particulars Amount Job 200 ($7.75*) Accumalateed hours i.e 40000 $310,000 Job 305 ($7.75*) Accumalated hours i.e 40000 $310,000 Total $620,000 Part c. Journal Entry worksheet Accounts Title Debit Credit Work in Process $42,625 Factory overhead Payable $42,625 (Being Factory overhead incurred as conversion cost which is work in process and It is payable)

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