Namee PAGE JOURNAL POST CREDIT DEBIT DATE OBJ. 1,3 Factory overhead rate, entry

Question

Namee PAGE JOURNAL POST CREDIT DEBIT DATE OBJ. 1,3 Factory overhead rate, entry for applying factory overhead, and factory overhead account balance The chief cost accountant for Sassy Beverage Co. estimated that total factory overhead cost for the Blending Department for the coming fiscal year beginning June 1 would be $97,500, and total direct labor costs would be $75,000. During June, the actual direct labor cost totaled $6,300, and factory overhead cost incurred totaled $8,250. a. What is the predetermined factory overhead rate based on direct labor cost? b. Journalize the entry to apply factory overhead to production for June. c. What is the June 30 balance of the account Factory Overhead-Blending Department? d. Does the balance in part () represent over- or underapplied factory overhead?

Explanation / Answer

a.

b.

c. Balance after making the above entry will be a debit of $60 (Actual cost $8,250 less o/h applied)

d. The factory o/h was under applied, cost incurred is more than absorbed.

Pre-determined Factory o/h rate Estimated O/H cost/ Estimated Labor cost =97500/75000 130% of labor cost

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