Question

Bergan Company estimates that total factory overhead costs will be $620,000 for the year. Direct labor hours are estimated to be 80,000. Required: a. For Bergan Company, determine the predetermined factory overhead rate using direct labor hours as the activity base. If required, round your answer to two decimal places. b. During May, Bergan Company accumulated 2,500 hours of direct labor costs on Job 200 and 3,000 hours on Job 305. Determine the amount of factory overhead applied to Jobs 200 and 305 in May. c. Prepare the journal entry on May 31 to apply factory overhead to both jobs in May according to the predetermined overhead rate. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for spaces or journal explanations. Every line on a journal page is used for debit or credit entries. Do not add explanations or skip a line between journal entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.

Answer 1

a.

Predetermined factory overhead rate = $620,000 / 80,000 = $7.75 per direct labor hour

b.
Job 200 = 2,500 hours X $7.75 per hour = $19,375

Job 305 = 3,000 hours X $7.75 per hour = $23,250

Total = $19,375 + $23,250 = $42,625

c.

Date	Description	Debit	Credit
May 31	Work in process	$42,625	-
	Factory overhead	-	$42,625