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 $519,680 $610,400 10,900 Estimated direct labor hours for year Estimated machine hours for year 16,240 $41,660 $52,680 Actual factory overhead costs for August Actual direct labor hours for August Actual machine hours for August 980 1,270 a. Determine the factory overhead rate for Factory 1. 32 per machine hour b. Determine the factory overhead rate for Factory 2. 56 per direct labor hour Feedback Check My Work a-b. Factory 1 overhead is applied based on machine hours. Factory 2 overhead is applied based on direct labor hours. 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. Factory 1 Work in Process 40.64 х

Answer 1

a
Factory overhead rate	32	per machine hour	=519680/16240
b
Factory overhead rate	56	per direct labor hour	=610400/10900
c
Factory 1
Work in process	40640		=1270*32
Factory overhead		40640
Factory 2
Work in process	54880		=980*56
Factory overhead		54880
d
Factory 1	1020	Debit Underapplied	=41660-40640
Factory 2	2200	Credit Overapplied	=54880-52680