Question

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 lab Factory 1 $436,800 5739,200 13.200 Estimated factory overhead cost for fiscal year beginning March 1 Estimated direct labor hours for year Estimated machine hours for year Actual factory overhead costs for March Actual direct labor hours for March Actual machine hours for March a. Determine the factory overhead rate for Factory 1. 20,800 $34,870 563.970 1.190 b. Determine per dideer overhead rate for Factory 2. C. Journalize the entries to apply factory overhead to production in each factory for March Factory 1 Factory d. Determine the balances of the tory overhead accounts for each factory as of March 31, and indicate whether the amounts represent overapplied factory overhead Factory 2

Answer 1

a) Factory overhead rate for factory 1 = 436800/20800 = 21 per machine hour

b) Factory overhead rate for factory 2 = 739200/13200 = 56 per direct labor hour

c) Journal entry

Factory 1	Work in process (1620*21)	34020
	Factory overhead-Factory 1		34020
Factory 2	Work in process (1190*56)	66640
	Factory overhead-Factory 2		66640

d) Factory 1 = 34020-34870 = 850 under applied

Factory 2 = 66640-63970 = 2670 Over applied