Question

A manufacturing company applies factory overhead based on direct labor hours. At the beginning of the year, it estimated that factory overhead costs would be $355,104 and direct labor hours would be 49,100. Actual manufacturing overhead costs incurred were $318,000, and actual direct labor hours were 51,000. The journal entry to apply the factory overhead costs for the year would include a a debit to Factory Overhead for $318,000 b. credit to Factory Overhead for $355,100 c. credit to Factory Overhead for $368,730 d. debit to Factory Overhead for $368,730

Answer 1

Correct answer-----------(c) Credit to factory overhead for $ 368,730

Working

Work in process account will be debited and manufacturing overhead account will be credit to record application of overhead. Calculation of overhead applied are given below

(A)	Budgeted Manufacturing Overheads	$ 355,100
(B)	Budgeted Direct labor hours	49,100
C= (A/B)	Predetermined Overhead rate	$ 7.23
(D)	Actual Direct labor hours	51,000
E=(DxC)	Overheads Applied	$ 368,730