Question

Fairfield company applies manufacturing overhead to products at a predetermined rate of $55 per direct labor hour. Its actual manufacturing costs for the most recent period are summarized here:

Item	Description			Total Cost
Direct materials	Used on Jobs 101 and 102			$	92,500
Indirect materials	Used on multiple jobs				32,500
Hourly labor wages	750 hours @ $35 per hour
	200 hours for Job 101 =	$	7,000
	300 hours for Job 102 =		10,500
	250 hours for Job 103 =		8,750		26,250
Factory supervision					4,500
Production engineer					8,500
Factory janitorial work					3,000
Selling, general, and administrative salaries					9,500
Other manufacturing overhead costs (factory rent, insurance, depreciation, etc.)					8,000
Other selling, general, and administrative costs (office rent, insurance, depreciation, etc.)					6,500

1. Post the preceding information to Fairfield Company’s Manufacturing Overhead T-account.

2. Compute over- or underapplied manufacturing overhead.

Answer 1

1) Manufacturing overhead T account

Manufacturing overhead
Indirect material	32500	Work in process (750*55)	41250
factory supervision	4500
Production engineer	8500
Factory janitorial work	3000
Other manufacturing overhead costs	8000
	56500		41250
Balance	15250

2) Under applied overhead = $15250