Factory Overhead Rates, Entries, and Account Balance Sundance Solar Company oper
ID: 2551132 • Letter: F
Question
Factory Overhead Rates, Entries, and Account Balance
Sundance Solar 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:
a. Determine the factory overhead rate for Factory 1.
$ per machine hour
b. Determine the factory overhead rate for Factory 2.
$ per direct labor hour
c. Journalize the entries to apply factory overhead to production in each factory for March.
d. Determine the balances of the factory overhead accounts for each factory as of March 31, and indicate whether the amounts represent overapplied factory overhead or underapplied factory overhead.
Factory 1 Factory 2 Estimated factory overhead cost for fiscal year beginning March 1 $687,960 $671,000 Estimated direct labor hours for year 11,000 Estimated machine hours for year 17,640 Actual factory overhead costs for March $55,170 $57,970 Actual direct labor hours for March 990 Actual machine hours for March 1,380Explanation / Answer
a factory overhead rate for Factory 1 = 687960/17640= $39 b Factory overhead rate for Factory 2=671000/11000=$61 c Work in Process inventory 53820 =1380*39 Factory overhead 53820 Work in Process inventory 60390 =990*61 Factory overhead 60390 d Factory 1 1350 Underapplied =55170-53820 Factory 1 2420 Overapplied =60390-57970
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