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Fairfield Company applies manufacturing overhead to products at a predetermined rate of $60 per direct labor hour. Its actual manufacturing costs for the most recent
Fairfield Company applies manufacturing overhead to products at a predetermined rate of $60 per direct labor hour. Its actual manufacturing costs for the most recent period are summarized here:
Item | Description | Total Cost | |||
Direct materials | Used on Jobs 101 and 102 | 87,000 | |||
Indirect materials | Used on multiple jobs | 14,000 | |||
Hourly labor wages | 870 hours @ $30 per hour | ||||
220 hours for Job 101 = | $ | 6,600 | |||
250 hours for Job 102 = | 7,500 | ||||
400 hours for Job 103 = | 12,000 | 26,100 | |||
Factory supervision | 3,950 | ||||
Production engineer | 5,300 | ||||
Factory janitorial work | 1,800 | ||||
Selling, general, and administrative salaries | 8,700 | ||||
Other manufacturing overhead costs (factory rent, insurance, depreciation, etc.) | 6,600 | ||||
Other selling, general, and administrative costs (office rent, insurance, depreciation, etc.) | 4,600 | ||||
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1. Prepare the journal entry to close the Manufacturing Overhead account balance to Cost of Goods Sold.
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