Determining actual factory overhead
The books of Starlite Products Co. revealed that the following general journal entry had been made at the end of the current accounting period:
Factory Overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000
Under- and Overapplied Factory Overhead . . . . . . . . . . . . . . . . . 2,000
Closed credit balance in factory overhead control account.
The total direct materials cost for the period was $40,000. The total direct labor cost, at an average rate of $10 per hour for direct labor, was one and one-half times the direct materials cost. Factory overhead was applied on the basis of $4 per direct labor hour. What was the total actual factory overhead incurred for the period? (Hint: First solve for direct labor cost and then for direct labor hours.)
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