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Homework answers / question archive / Company assembles and sells hand drills All parts are purchased and the cost of the parts per drill total P50
Company assembles and sells hand drills All parts are purchased and the cost of the parts per drill total P50. Labor is paid on the basis of P32 per drill assembled. Because the company handles only one product, the unit cost base is used for applying factory overhead at a predetermined rate. Estimated factory overhead for the coming period based on a production of 30,000 drills, is as follows: Indirect Materials P220,000 Indirect Labor 240,000 Light and Power 30,000 Depreciation 25,000 Miscellaneous 55,000 During the period, actual factory overhead was P561,600 and 29,000 drills were assembled. These units were completed but not yet transferred to the finished goods storeroom. Required: 1. Prepare the entries to record the preceding information 2. Determine the amount of over-or underapplied overhead.
| 1) | Journal Entries | ||||
| Particulars | Debit | Credit | |||
| Work in Process | $ 14,50,000.00 | ||||
| To Materials | $ 14,50,000.00 | ||||
| ($ 50 x 29000) | |||||
| Work in Process | $ 9,28,000.00 | ||||
| To Wages Payable | $ 9,28,000.00 | ||||
| ($ 32 x 29000) | |||||
| Factory Overhead | $ 2,20,000.00 | ||||
| To Materials | $ 2,20,000.00 | ||||
| Factory Overhead | $ 2,40,000.00 | ||||
| To Wages Payable | $ 2,40,000.00 | ||||
| Factory Overhead | $ 30,000.00 | ||||
| To Accounts Payable | $ 30,000.00 | ||||
| Factory Overhead | $ 25,000.00 | ||||
| To Accumulated Depreciation | $ 25,000.00 | ||||
| Factory Overhead | $ 55,000.00 | ||||
| To Accounts Payable | $ 55,000.00 | ||||
| 2) | Computation of Over/ Underapplied OH | |||
| Indirect Materials | $ 2,20,000.00 | |||
| Indirect Labor | $ 2,40,000.00 | |||
| Light and Power | $ 30,000.00 | |||
| Depreciation | $ 25,000.00 | |||
| Miscellaneous | $ 55,000.00 | |||
| Total estimated OH | $ 5,70,000.00 | |||
| Estimated units | 30000 | |||
| OH rate | $ 19.00 | |||
| Actual no. of units assembled | 29000 | |||
| OH applied | $ 5,51,000.00 | |||
| OH incurred | $ 5,61,600.00 | |||
| Underapplied OH | $ 10,600.00 | |||
