Hudson Company operates two factories. The company applies factory overhead to j

Question

Hudson 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: Determine the factory overhead rate for Factory 1. Determine the factory overhead rate for Factory 2. Determine the factory overhead applied to production in each factory for June. Determine the balances of the factory accounts for each factory as of June 30, and indicate whether the amounts represent overapplied or underapplied factory overhead.

Explanation / Answer

a Estimated Factory Over Head for Factory 1 475,000.00 Estimated Machine Hours for year 20,000.00 Factory Over Head Rate 475,000 / 20,000 Factory Over Head Rate 23.75 per Machine Hour b Estimated Factory Over Head for Factory 2 600,000.00 Estimated Labor Hours for year 15,000.00 Factory Over Head Rate 600,000 / 15,000 Factory Over Head Rate $40.00 per Labor hour c Machine Hours for Factory 1 1,560.00 Factory Over Head Rate 23.75 per Machine Hour Factory Over Head 23.75 × 1,560 Factory Over Head Applied 37050 Labor Hours for Factory 2 1,350.00 Factory Over Head Rate $40.00 per Labor hour Factory Over Head 1350 × 40 Factory Over Head Applied 54,000.00 d Actual Factory Over Head for Factory 1 38,000.00 Factory Over Head Applied 37,050.00 Factory Over Head Under Applied 950.00 Actual Factory Over Head for Factory 2 52,000.00 Factory Over Head Applied 54,000.00 Factory Over Head OverApplied (2,000.00)

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