Apollo Manufacturing produces a basic cellphone as a contract manufacturer. Over
ID: 2470762 • Letter: A
Question
Apollo Manufacturing produces a basic cellphone as a contract manufacturer. Overhead is applied at a rate of $42 per direct labor hour. The direct labor rate is $18 per hour. In March, there was no beginning or ending work in process, and the assembly department produced 20,000 finished phones. The materials cost was $120,000, and there were 2,500 direct labor hours worked during the month. Actual overhead spending was $103,400 during the month. Calculate the total cost of production in the month of March and the cost per unit for each phone produced. Determine if overhead was over applied or under applied and by what amount.
Explanation / Answer
Actual overhead Incurred : $103,400
Total Overhead Applied : $105,000
Over applied Manufacturing Overhead = ($105,000 - $103,400) = $1600
Note: When apllied OH is more than the actual overhead : Over- applies or vice versa
The journal entry will be :
Dr. Manufacturing overhead A/c $1600
Cr. Finished goods A/c $1600
Direct Materials $120,000 Direct labor ( 2,500 * $18) $45,000 Overhead applied (2500 * $42 ) $105,000 Total cost $270,000 Cost per unit (Total cost / Number of units produced) ($270,000 / 20,000) $13.50Related Questions
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