Question

The estimated total factory overhead cost and total machine hours for Department 40 for the current year are $250,000 and 56,250, respectively. During January, the first month of the current year, actual machine hours used totaled 5,100 and factory overhead cost incurred totaled $22,000. a. Determine the factory overhead rate based on machine hours. Round your answer to two decimal places. per machine hour 1. Present the entry to apply factory overhead to production in Department 40 for January What is the balance of Factory Overhead Department 40 at January 312 credit d. Does the balance of Factory Overhead-Department 40 at January 31 represent overapplied or under oplied factory overhead? Pro 5 6 8 9 U O P T 3 G Н. J K K B N M E

Answer 1

a) Factory overhead rate = Estimated total factory overhead cost/Total machine hours Factory overhead rate = $250,000/$56,250 Factory overhead rate = $4.44 per machine hour Credit b) Account Titles and Explanation Work in process inventory (5,100*$4.44) Factory overhead (To record the factory overhead applied) Debit $ 22,644 $ 22,644 c) Actual overhead (debit) = $22,000 Overhead applied (credit) = $22,644 Balance of overhead = $22,644 - $22,000 Balance of overhead = $644 Credit d) Overhead applied is more than the actual overhead incurred. Hence, the overhead is Overapplied.