The cost accountant for River Rock Beverage Co. estimated that total factory overhead cost for the Blending Department for the coming fiscal year beginning February 1 would be $130,000, and total direct labor costs would be $100,000. During February, the actual direct labor cost totaled $12,500, and factory overhead cost incurred totaled $16,750.

Required:

a.	What is the predetermined factory overhead rate based on direct labor cost?
b.	Journalize the entry to apply factory overhead to production for February 28. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for spaces or journal explanations. Every line on a journal page is used for debit or credit entries. Do not add explanations or skip a line between journal entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.
c.	What is the February 28 balance of the account Factory Overhead-Blending Department?
d.	Does the balance in part (c) represent over- or underapplied factory overhead?

CHART OF ACCOUNTS

River Rock Beverage Co.

General Ledger

	ASSETS
110	Cash
121	Accounts Receivable
125	Notes Receivable
126	Interest Receivable
131	Materials
141	Work in Process-Blending Department
142	Work in Process-Filling Department
151	Factory Overhead-Blending Department
152	Factory Overhead-Filling Department
161	Finished Goods
171	Supplies
172	Prepaid Insurance
173	Prepaid Expenses
181	Land
191	Factory
192	Accumulated Depreciation-Factory

	LIABILITIES
210	Accounts Payable
221	Utilities Payable
231	Notes Payable
236	Interest Payable
251	Wages 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	Supplies Expense
540	Administrative Expenses
561	Depreciation Expense-Factory
590	Miscellaneous Expense
710	Interest Expense

a. What is the predetermined factory overhead rate based on direct labor cost?

%

b. Journalize the entry to apply factory overhead to production for February 28. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for spaces or journal explanations. Every line on a journal page is used for debit or credit entries. Do not add explanations or skip a line between journal entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.

PAGE 10

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2

c. What is the February 28 balance of the account Factory Overhead-Blending Department?

Amount:
Debit or credit?

d. Does the balance in part (C) represent over- or underapplied factory overhead?