1. The chief cost accountant for Kenner Beverage Co. estimated that total factory overhead cost for...
1. The chief cost accountant for Kenner Beverage Co. estimated that total factory overhead cost for the Blending Department for the coming fiscal year beginning May 1 would be $756,600, and total direct labor costs would be $582,000. During May, the actual direct labor cost totaled $50,000, and factory overhead cost incurred totaled $67,600.
a. What is the predetermined factory overhead rate based on direct labor cost? Enter your answer as a whole percent not in decimals.
b. Journalize the entry to apply factory overhead to production for May.
c. What is the May 31 balance of the account Factory Overhead—Blending Department?
Amount: $
Debit or Credit?
d. Does the balance in part (c) represent
overapplied or underapplied factory overhead?
Homework Answers
a. Predetermined factory overhead rate = Estimated factory overhead / Estimated direct labor cost
Predetermined factory overhead rate = $756,600 / 582,000 * 100 = 130%
b.
| Work in process inventory ($50,000*130%) | $65,000 | |
| Factory overhead | $65,000 |
c.
May 31 balance of factory overhead = Applied factory overhead - Actual factory overhead
May 31 balance of factory overhead = $65,000 - 67,600 = $2,600 Debit
d.
Underapplied factory overhead = $2,600
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