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Cavy Company estimates that total factory overhead costs will be $569,642 for the year

Accounting Sep 12, 2020

Cavy Company estimates that total factory overhead costs will be $569,642 for the year. Direct labor hours are estimated to be 105,100.

Required:

a.Compute the predetermined factory overhead rate. Round your answer to the nearest cent.

b.Determine the amount of factory overhead applied to Job 567 if the amount of direct labor hours is 1,400 and to Job 999 if the amount of direct labor hours is 2,800.

c.Prepare the journal entry to apply factory overhead for April according to the predetermined overhead rate.

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.

Expert Solution

a. Computation of Predetermined Overhead Rate:

Predetermined Overhead Rate = Estimated Factory Overhead / Direct Labor Hours

= $569,642/105,100

Predetermined Overhead Rate = $5.42

 

b. Computation of Factory Overhead Rate applied to job 567 and job 999:

Job 567 = Direct Labor Hours * Predetermined Factory Overhead Rate

            = 1,400 hours*$5.42

            = $7,588

 

Job 999 = Direct Labor Hours * Predetermined Factory Overhead Rate

            = 2,800*$5.42

            = $15,176

 

 

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