Applying Factory Overhead

Rothchild Company estimates that total factory overhead costs will be $810,000 for the year. Direct labor hours are estimated to be 90,000.

a. For Rothchild Company, determine the predetermined factory overhead rate using direct labor hours as the activity base. $ per direct labor hour

b. During August, Rothchild Company accumulated 3,500 hours of direct labor costs on Job 40 and 4,200 hours on Job 42. Determine the amount of factory overhead applied to Jobs 40 and 42 in August. $

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c. Prepare the journal entry to apply factory overhead to both jobs in August according to the predetermined overhead rate.

	Work in Process
	Factory Overhead

Factory Overhead Rates, Entries, and Account Balance

Hudson 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 September 1	$1,064,440		$495,900
Estimated direct labor hours for year				8,700
Estimated machine hours for year		23,140
Actual factory overhead costs for September		$84,870		$42,680
Actual direct labor hours for September				780
Actual machine hours for September		1,800

a. Determine the factory overhead rate for Factory 1. $ per machine hour

b. Determine the factory overhead rate for Factory 2. $ per direct labor hour

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c. Journalize the entries to apply factory overhead to production in each factory for September.

Factory 1	Work in Process
	Factory Overhead
Factory 2	Work in Process
	Factory Overhead

Predetermined Factory Overhead Rate

Willies Engine Shop uses a job order cost system to determine the cost of performing engine repair work. Estimated costs and expenses for the coming period are as follows:

Engine parts		$863,100
Shop direct labor		630,000
Shop and repair equipment depreciation		44,900
Shop supervisor salaries		125,000
Shop property tax		22,700
Shop supplies		17,400
Advertising expense		17,300
Administrative office salaries		74,200
Administrative office depreciation expense		9,500
	Total costs and expenses	$1,804,100

The average shop direct labor rate is $18 per hour.

Determine the predetermined shop overhead rate per direct labor hour. Round the answer to nearest whole cent. $ per direct labor hour

Entries for Factory Costs and Jobs Completed

Munch Printing Inc. began printing operations on January 1. Jobs 301 and 302 were completed during the month, and all costs applicable to them were recorded on the related cost sheets. Jobs 303 and 304 are still in process at the end of the month, and all applicable costs except factory overhead have been recorded on the related cost sheets. In addition to the materials and labor charged directly to the jobs, $2,570 of indirect materials and $31,070 of indirect labor were used during the month. The cost sheets for the four jobs entering production during the month are as follows, in summary form:

Job 301				Job 302
Direct materials	$26,570			Direct materials	$12,420
Direct labor	10,200			Direct labor	5,300
Factory overhead	5,610			Factory overhead	2,915
Total	$42,380			Total	$20,635
Job 303				Job 304
Direct materials	$33,960			Direct materials	$7,650
Direct labor	11,300			Direct labor	1,500
Factory overhead				Factory overhead

Journalize the summary entry to record each of the following operations for January (one entry for each operation):

a. Direct and indirect materials used. For a compound transaction, if an amount box does not require an entry, leave it blank.

	Work in Process
	Factory Overhead
	Materials

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b. Direct and indirect labor used. For a compound transaction, if an amount box does not require an entry, leave it blank.

	Work in Process
	Factory Overhead
	Wages Payable

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c. Factory overhead applied to all four jobs (a single overhead rate is used based on direct labor cost).

	Work in Process
	Factory Overhead

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d. Completion of Jobs 301 and 302.

	Finished Goods
	Work in Process