Question

Factory Overhead Rates, Entries, and Account Balance Eclipse 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 labor hours in Factory 2. Estimated factory overhead costs, direct labor hours, and machine hours are as follows: Factory 1 Factory 2 Estimated factory overhead cost for fiscal year beginning August 1 $297,180 $993,300 Estimated direct labor hours for year 12,900 Estimated machine hours for year 16,510 Actual factory overhead costs for August $23,800 $85,750 Actual direct labor hours for August 1,160 Actual machine hours for August 290 a. Determine the factory overhead rate for Factory 18 per machine hour b. Determine the factory overhead rate for Factory 2. 7 7 per direct labor hour S c. Journalize the entries to apply factory overhead to production in each factory for August. If an amount box does not require an entry leave it blank Work in Process

Answer 1

23220 Factory 1 Work in Process Factory Overhead 23220 Factory 2 89320 Work in Process Factory Overhead 89320 d) $580 $3570 Debit - Underapplied Credit - Overapplied

Explanation:

Factory 1 - Overhead applied

Overhead rate x Actual machine hours = Overhead applied

18 x 1290 = 23220

Factory 1 - Overhead applied

Overhead rate x Actual machine hours = Overhead applied

77 x 1160 = 89320