A manufacturing company applies factory overhead based on direct labor hours. At

Question

A manufacturing company applies factory overhead based on direct labor hours. At the beginning of the year, it estimated that factory overhead costs would be $360,000 and direct labor hours would be 45,000. Actual manufacturing overhead costs incurred were $377,200, and actual direct labor hours were 47,000. The entry to apply the factory overhead costs for the year would include a a. credit to factory overhead for $360,000. b. debit to factory overhead for $360,000. c. credit to factory overhead for $376,000. d. debit to factory overhead for $377,200.

Explanation / Answer

c. credit to factory overhead for $376,000

Predetermined Overhead Rate

= $360,000 / 45,000 hrs

= $8 per labor hr

------------------------------------------

Applied Overhead = 47,000 hrs * $8 per hour

= $376,000

----------------------------------------

Actual Overhead = $377,200

Underapplied Overhead = $377,200 - $376,000

= $1,200

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.