Question

Applying Factory Overhead Darling Company estimates that total factory overhead costs will be $378,000 for the year. Direct labor hours are estimated to be 27,000. a. For Darling Company, determine the predetermined factory overhead rate using direct labor hours as the activity base. If required, round your answer to two decimal places. $ per direct labor hour b. During August, Darling Company accumulated 500 hours of direct labor costs on Job 40 and 520 hours on Job 42. Determine the amount of factory overhead applied to Jobs 40 and 42 in August. $ c. Prepare the journal entry to apply factory overhead to both jobs in August according to the predetermined overhead rate.

Answer 1

A)Pre determined factory overhead = Total factory overheads/ Direct labour hours

=$378000/27000

=14 per direct labour hour

B) Amount of factory OH applied

Job 40 = 14*500 = 7000

Job 42 = 14*520 =7280

c) Journal entry to apply factory overhead

Job 40 Dr     7000

To Factory overhead     7000

Job 42 Dr    7280

To factory overhead    7280