Rothchild Company estimates that total factory overhead costs will be $810,000 f

Question

Rothchild Company estimates that total factory overhead costs will be $810,000 for the year. Direct labor hours are estimated to be 90,000. Required: A. For Rothchild Company, determine the predetermined factory overhead rate using direct labor hours as the activity base. B. During August, Rothchild Company accumulated 3,500 hours of direct labor costs on Job 40 and 4,200 hours on Job 42. Determine the amount of factory overhead applied to Jobs 40 and 42 in August. C. Prepare the journal entry on Aug. 31 to apply factory overhead to both jobs in August according to the predetermined overhead rate. Refer to the Chart of Accounts for exact wording of account titles.

Explanation / Answer

A. Predetermined factory overhead rate = overhead/ labour hrs

= 810000 / 90000= $ 9

B Applied factory Overhead

.job 40 = 3500 × 9 = $31500

Job 42 = 4200 × 9 =$37800

C. Journal entry for factory overhead applied

Cost of goods sold debit

Factory overhead credit

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