Question

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	$1,516,700	$1,074,600
Estimated direct labor hours for year		29,850
Estimated machine hours for year	52,300
Actual factory overhead costs for March	$124,880	$98,910
Actual direct labor hours for March		2,700
Actual machine hours for March	4,350

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.

Answer 1

Answer: The factory overhead rate for factory 11- Factory overhead vate - Estimated factory overhead Estimated machine hours 1,516,700 51,300 Factory overhead nate =$29 Per Machine hour P the factory overhead rate for factory 2". Factory overhead naté - Estimated factory overhead Estimated keadai direct laloor hours $ 11074,600 29,850 factory overhead rate = $ 36 per direct labor hour (C) Journal Entry! The Manufacturing overhead in factory i pate I particulary Debit credit Work in process inventory Ale dr (4,350 Machine houry x$ 49 per $126,150 Machine hour) TO Manufacturing over head $ 126,150 (Being to recold to apply the mana- Jacturing overhead to production) Fa Journal Entry the Manufacturing overhead in factory a pate particulars Debit lerehit Work in process inventory Ale dr | $97,200 |(2,700 labor houry x $36 perlabor hour! I TO Manufacturing overhead $97,200 Being to apply the manufacturing Loverhead to production)

a cold factory As applied over head is grater than Actual overhead factory is oopplied by ($126,150 - $124,880) $1270 particulars Debit - leredit Maumfacturing overhead Ale dr $1270 - to cost of goods sold $1, 970 (Being Manufacturing overhead dispose off) factory As applied overhead is less than actual overhead factory overhead ij underopplied By($98.910 - $97,200) $1,710 particulars - kredit Cost of goods sold Alc dr $ 1,710 . To pactory over head |$1,710 Being factory overhead dispose off) Debit