11.Suppose, instead, that Johnson Manufacturing chooses to allocate Factory Over
ID: 2501923 • Letter: 1
Question
11.Suppose, instead, that Johnson Manufacturing chooses to allocate Factory Overhead on the basis of machine hours. If the estimated Factory Overhead for 2013 is $100,000 and estimated machine hours for 2013 are 25,000 machine hours, calculate the Predetermined Overhead Rate per machine hour.
12.Referring to question 11, if Johnson Manufacturing uses 300 machine hours in building Job 552, what entry would be made to apply the factory overhead?
13.Thinking about questions 9 and 11, a company has to make a choice as to which cost driver to use for applying the overhead. Under what circumstance might the company use direct labor hours? Under what circumstance might they use machine hours?
14.At the end of the year, a company compares the actual overhead with the overhead applied. Suppose that Johnson Company’s Factory Overhead account appears as follows at the end of 2013:
Factory Overhead
Actual
Applied
104,000
102,000
Was the factory overhead underapplied or overapplied? (Did they apply too little or too much?) What entry would be made to close the Factory Overhead account. (The word “close” means “bring to a zero balance.”) See the section on disposal of factory overhead balance in the text.
15. Suppose, on the other hand, that the status of the Factory Overhead account is as follows at the end of the year
Factory Overhead
Actual
Applied
105,000
106,000
16. Was the factory overhead underapplied or overapplied?
17. What entry would be made to close the Factory Overhead account?
18. What entry is made when the goods get finished? (See entry g)
19.What two entries are made when goods get sold? (See entries h and i)
20.If period costs, such as office salaries and sales salaries are incurred, how would they be recorded? (See entry j)
21.If a job order costing system is used for a professional service business, would a finished goods account be used?
Actual
Applied
104,000
102,000
Explanation / Answer
11.
14.
15.
Predetermined Overhead rate per machine hour = Estimated Factory Overhead/ Machine hours = $ 100,000/25,000 = $ 4 per Machine HourRelated Questions
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