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: Factory 1 Factory 2 Estimated factory overhead cost for fiscal year beginning March 1 $708,050 $1,155,000 Estimated direct labor hours for year 15,400 Estimated machine hours for year 20,230 Actual factory overhead costs for March $56,680 $100,080 Actual direct labor hours for March 1,390 Actual machine hours for March 1,580 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. Factory 1 Factory 2 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 $

Respuesta :

Answer:

The answer to this question can be defined as follows:

Explanation:  

In point a:

[tex]\text{Factory Overhead Rate 1} = \frac{\text{Expected administrative overhead to factory}}{\text{Estimated period time to machine}}[/tex]

                                        [tex]=\frac{12900000}{ 600000 }\\\\ = \$ \ 21.50[/tex]

In point b:

[tex]\text{Factory overtime rate 1} = \frac{\text{overhead costs estimated expense}}{\text{Specific hours of work estimated for the year}}[/tex]

                                     [tex]= \frac{10,200,000 }{250000} \\\\ = \$ \ 40.80[/tex]

In point c:

Daily paper  

Number      Name of account                                   Debit                     Credit

   1.              Working [tex](610000 \times $21.50)[/tex]                      [tex]\$ \ 13115000[/tex]                

                    Plant Overhead                                                        [tex]\$ \ 13115000[/tex]

   2.             Job under way [tex](245000\times $40.80)[/tex]              [tex]\$ \ 9996000[/tex]

                   Overhead plant                                                            [tex]\$ \ 9996000[/tex]

In point d:

[tex]\text{Factory 1} = 12,990,000 - 13,115,000[/tex]

                [tex]= 125000 \ Overapplied\ credit[/tex]

[tex]\text{Factory 1} = 10,090,000 - 9,996,000[/tex]

                [tex]= $94000 \ Underapplied \ Debit[/tex]