Sundance Solar 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	$1,450,400	$800,250
Estimated direct labor hours for year		24,250
Estimated machine hours for year	51,800
Actual factory overhead costs for March	$116,120	$98,220
Actual direct labor hours for March		2,920
Actual machine hours for March	4,200

Required:

	a. Determine the factory overhead rate for Factory 1.
	b. Determine the factory overhead rate for Factory 2.
	c. Journalize the Mar. 31 entries to apply factory overhead to production in each factory. Refer to the chart of accounts for the exact wording of the account titles.
	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.

Step One Journalize the Mar. 31 entry to apply factory overhead to production in Factory 1. Refer to the Chart of Accounts for exact wording of account titles. Scroll down to record the entry for Factory 2. Step two: Now journalize the second Mar. 31 entry to apply factory overhead to production in Factory 2. Refer to the Chart of Accounts for exact wording of account titles.

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

Sundance Solar 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	$1,450,400	$800,250
Estimated direct labor hours for year		24,250
Estimated machine hours for year	51,800
Actual factory overhead costs for March	$116,120	$98,220
Actual direct labor hours for March		2,920
Actual machine hours for March	4,200

Required:

	a. Determine the factory overhead rate for Factory 1.
	b. Determine the factory overhead rate for Factory 2.
	c. Journalize the Mar. 31 entries to apply factory overhead to production in each factory. Refer to the chart of accounts for the exact wording of the account titles.
	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.

X

Chart of Accounts

CHART OF ACCOUNTS

Sundance Solar Company

General Ledger

	ASSETS
110	Cash
121	Accounts Receivable
125	Notes Receivable
126	Interest Receivable
131	Materials
132	Work in Process
133	Factory Overhead
134	Finished Goods
141	Supplies
142	Prepaid Insurance
143	Prepaid Expenses
181	Land
191	Factory
192	Accumulated Depreciation-Factory

	LIABILITIES
210	Accounts Payable
221	Utilities Payable
231	Notes Payable
236	Interest Payable
241	Lease Payable
251	Wages Payable
252	Consultant Fees Payable

	EQUITY
311	Common Stock
340	Retained Earnings
351	Dividends
390	Income Summary

	REVENUE
410	Sales
610	Interest Revenue

	EXPENSES
510	Cost of Goods Sold
520	Wages Expense
531	Selling Expenses
532	Insurance Expense
533	Utilities Expense
534	Office Supplies Expense
540	Administrative Expenses
560	Depreciation Expense-Factory
590	Miscellaneous Expense
710	Interest Expense

X

Factory Overhead Rates

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

X

Journal

c. Journalize the Mar. 31 entry to apply factory overhead to production in Factory 1. Refer to the Chart of Accounts for exact wording of account titles. Scroll down to record the entry for Factory 2.

PAGE 10

JOURNAL

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1
2

Now journalize the second Mar. 31 entry to apply factory overhead to production in Factory 2. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 10

JOURNAL

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1
2

X

Final Question

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.