Question

Winston Company estimates that the factory overhead for the following year will be $1,250,000. The company has decided that the basis for applying factory overhead should be machine hours, which is estimated to be 50,000 hours. The total machine hours for the year were 54,300. The actual factory overhead for the year was $1,348,800. a. Determine the total factory overhead amount applied. b. Compute the over- or underapplied amount for the year. c. Journalize the entry to transfer the over- or underapplied factory overhead to cost of goods sold. If an amount box does not require an entry, leave it blank. - 88

Answer 1

Predetermined Overhead rate = Estimated overhead/Estimated machine hours = 1,250,000/50,000 = 25 per mh

A) Overhead applied = 25 * 54,300

= 1,357,500

.

B) over-applied overhead = 8,700

(1,357,500-1,348,800)

.

C)

Manufacturing overhead	8700
Cost of Goods Sold		8700