Question

Verizox Company uses a job order cost system with manufacturing overhead applied to products based on direct labor hours. At the beginning of the most recent year, the company estimated its manufacturing overhead cost at $198,970. Estimated direct labor cost was $474,770 for 19,700 hours. Actual costs for the most recent month are summarized here: Total Cost $ 47, 478 Item Description Direct labor (1,970 hours) Indirect costs Indirect labor Indirect materials Factory rent Factory supervision Factory depreciation Factory janitorial work Factory insurance General and administrative salaries Selling expenses 2,510 3,420 3,340 4,780 5,740 1,130 1,850 4,240 5, 380 Required: 1., 2. & 3-a. Prepare the journal entries for overhead. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet 2 3 Record the application of manufacturing overhead to production.

Answer 1

1) Overhead rate = 198970/19700 = 10.10 per labor hour

Journal entry

Transaction	General Journal	Debit	Credit
a	Work in process (1970*10.10)	19897
	Manufacturing overhead		19897
	(to record applied overhead)
b	Manufacturing overhead	22770
	Account payable/cash		22770
	(To record actual overhead)
c	Cost of goods sold (22770-19897)	2873
	Manufacturing overhead		2873
	(To record manufacturing overhead)

3a) Increase