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A manufacturing company applies factory overhead based on direct labor hours
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
Expert Solution
(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 |
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