Factory Overhead Rates, Entries, and Account Balance

Montenegro Metal 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 March 1	$365,280		$1,088,000
Estimated direct labor hours for year		16,000
Estimated machine hours for year	15,220
Actual factory overhead costs for March	$29,270		$94,000
Actual direct labor hours for March		1,440
Actual machine hours for March	1,190

a. Determine the factory overhead rate for Factory 1.

b. Determine the factory overhead rate for Factory 2.

C.Journalize the entries to apply factory overhead to production in each factory for March. If an amount box does not require an entry, leave it blank.

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

d. Determine the balances of the factory overhead accounts for each factory as of March 31 and indicate whether the amounts represent overapplied factory overhead or underapplied factory overhead.

Factory 1	$	Debit	Underapplied
Factory 2	$	Credit	Overapplied