Question

Winston Company estimates that the factory overhead for the following year will be $708,000. The company has decided that the basis for applying factory overhead should be machine hours, which is estimated to be 35,400 hours. The total machine hours for the year were 54,900 hours. The actual factory overhead for the year was $1,113,000. Enter the amount as a positive number, a. Determine the total factory overhead amount applied. b. Calculate the over- or underapplied amount for the year. c. Prepare the journal entry to close factory overhead into Cost of Goods Sold.

Answer 1

© Predetermined overhead rate Estimated overhead Estimated machine hour $708000 35400 hours - $ 20 per hour a Overhead applied = Predetermined Actual machine * hour rate per hour =54900 x $20 = $ 10,98,000 ® Underapplied overhead overhead e Actual overhead- Applied = 1113000 – 1098000 = $ 15,000 © $15000 Cost of goods sold Ale or $15000 To manufacturing overhead