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A manufacturing company applies factory overhead based on direct labor hours

Accounting

A manufacturing company applies factory overhead based on direct labor hours. At the beginning of the year, it estimated that factory overhead costs would be $347,000 and direct labor hours would be 46,700. Actual manufacturing overhead costs incurred were $302,400, and actual direct labor hours were 54,300. The journal entry to apply the factory overhead costs for the year would include a Oa. debit to Factory Overhead for $302,400 Ob. credit to Factory Overhead for $403,449 Oc. credit to Factory Overhead for $347,000 Od. debit to Factory Overhead for $403,449

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(b) Credit to factory overhead for $ 403,449

Working:

Work in process account will be debited and manufacturing overhead account will be credit to record application of overhead. Calculation of overhead applied are given below

(A) Budgeted Manufacturing Overheads $ 347,000
(B) Budgeted Direct labor hours              46,700
C= (A/B) Predetermined Overhead rate $ 7.43
     
(D) Actual Direct labor hours              54,300
     
E=(DxC) Overheads Applied $ 403,449