Almerinda Company estimates that total factory overhead costs will be $1,355,000

Question

Almerinda Company estimates that total factory overhead costs will be $1,355,000 for the year. Direct labor hours are estimated to be 542,000.

Required:

A. For Almerinda Company, determine the predetermined factory overhead rate using direct labor hours as the activity base.

per direct labor hour

B. During April, Almerinda Company accumulated 18,300 hours of direct labor costs on Job 50 and 24,200 hours on Job 51. Determine the amount of factory overhead applied to Jobs 50 and 51 in April.

C. Prepare the journal entry on Apr.30 to apply factory overhead to both jobs in April according to the predetermined overhead rate. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 10

JOURNAL

1

2

A. For Almerinda Company, determine the predetermined factory overhead rate using direct labor hours as the activity base. B. During April, Almerinda Company accumulated 18,300 hours of direct labor costs on Job 50 and 24,200 hours on Job 51. Determine the amount of factory overhead applied to Jobs 50 and 51 in April. C. Prepare the journal entry on Apr. 30 to apply factory overhead to both jobs in April according to the predetermined overhead rate. Refer to the Chart of Accounts for exact wording of account titles.

A. For Almerinda Company, determine the predetermined factory overhead rate using direct labor hours as the activity base.

per direct labor hour

B. During April, Almerinda Company accumulated 18,300 hours of direct labor costs on Job 50 and 24,200 hours on Job 51. Determine the amount of factory overhead applied to Jobs 50 and 51 in April.

C. Prepare the journal entry on Apr.30 to apply factory overhead to both jobs in April according to the predetermined overhead rate. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 10

JOURNAL

DATE DESCRIPTION POST. REF. DEBIT CREDIT

1

2

Explanation / Answer

Answer : A:

Predetermined Overhead rate = Overhead cost/Direct labor hour rate

= 1355000/542000

= $ 2.50

Answer : B: Overhead applied for job 50

= direct labor hour reuired * Direct labor overhead rate

= 18300*2.50

= $ 45750

Overhead applied for job 51

= direct labor hour reuired * Direct labor overhead rate

= 24200*2.50

= $ 60500

Journal Entry

For Job 50

  

For Job 51

Sl no. Date Description post. ref. Debit Credit 1 4/30 Work- in- process-Inventory 45750 Manufacturing Overhead 45750

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