Question

Salinger Company estimates that total factory overhead costs will be $115,000 for the year. Direct labor hours are estimated to be 23,000.

a. For Salinger Company, determine the predetermined factory overhead rate using direct labor hours as the activity base. If required, round your answer to two decimal places.
$ per direct labor hour

b. During April, Salinger Company accumulated 650 hours of direct labor costs on Job 50 and 500 hours on Job 51. Determine the amount of factory overhead applied to Jobs 50 and 51 in April.
$

c. Prepare the journal entry to apply factory overhead to both jobs in April according to the predetermined overhead rate.

Answer 1

A) predetermined overhead rate = overhead/ labor hours

= $115000/23000 = $5 per hour

B) factory overhead applied

= Hours * rate

Job 50 = 650*$5 = $3250

Job 51 = 500*$5 = $2500

Total overhead = $3200 + $2500 = $5700

C) following entry will be made

Work in process account. $5700 (debit)

Overhead account. $5700 (credit)

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