Lawn and Mow estimates that the factory overhead for the following year will be $2,859,000. The company has decided that the basis for applying factory overhead should be machine hours, which is estimated to be 176,000 hours. The total machine hours for the year were 173,300. The actual factory overhead for the year was $2,725,800. *Note: Round to the nearest cent a Compute the predetermined factory overhead rate. b. Determine the amount of factory overhead applied to Job 135 if the amount of direct labor hours is 890 and to Job 246 if the amount of direct labor hours is 1575. Complete the journal entry to record the overall applied factory overhead. c. Compute the over- or underapplied amount for the year. d. Journalize the entry to transfer the over-OR underapplied factory overhead to cost of goods sold. 2. Below is a cost sheet for H&L Co a rug manufacturing company. You are the manager and have received the cost of production sheet from the accounting office and need to make some decisions based on the information provided. A. Using the examples, you worked on in chapter 3, dissect the cost of production sheet and translate it into story form. Based on your records last period the equivalent units of production for direct materials was $16.25 and conversion was $11.32. a. Identify if the change in EUP was an increase or decrease and what amount for each. b. What are some contributing factors to the changes? C. Are these changes good or bad? d. What kind of effects will the fluctuation of the cost of EUP have on the decisions you will be making for the next period? B. Prepare the journal entries to show the purchase of materials, the conversion costs (assuming the direct labor was $125,000) and the transfer to work in process and finished goods. C. Prepare a Work in Process T account. H&L Co. CONVERSION Cost of Production Report- Department FIFO Equivalent Units of Production UNITS WHOLE UNITS DIRECT MATERIALS Units Charged to production Beginning WIP Inventory in Process, July 1 950.00 Received from Milling Department 15,620.00 Total Units accounted for by Sifiting Department 16,570.00 EUP Units to be assigned costs: Direct Materials Beginning WIP 950.00 Started and completed (Transferred to packaging - Beg WIL 14,780.00 14,780.00 Transferred to Packaging Department 15,730.00 14,780.00 Ending WIP 840.00 840.00 Total Units to be assigned costs 16,570.00 15,620.00 (Must equal total units accounted for by sifting department) Conversion 475.00 14,780.00 15,255.00 504.00 15,759.00 COSTS Conversion Direct Materials 230,000.00 15,620.00 14.72 125,000.00 15,759.00 7.93 COSTS Cost per equivalent Unit Total costs for July Sifting Department Total Equivelant Units from step 2 Cost per equivalent Unit Costs Assigned to production Cost of Beginning WIP Cost incurred in period (DM + DL + FOH) Total costs to account for 28,470.00 355,000.00 383,470.00 28,470.00 28,470.00 Costs allocated to completed and partially completed units Beginning WIP To complete Beginning WIP Cost to complete July WIP Cost of started and completed in period Transferred to packaging department Ending Inventory WIP Total Costs assigned 28,470.00 28,470.00
