Question : 151. The Winston Company estimates that the factory overhead for the : 1251541

151. The Winston Company estimates that the factory overhead for the following year will be $1,250,000. The company has decided that the basis for applying factory overhead should be machine hours, which is estimated to be 50,000 hours. The total machine hours for the year was 54,300. The actual factory overhead for the year was $1,375,000.

a) Determine the total factory overhead amount applied.

b) Calculate the over or under applied amount for the year.

c) Prepare the journal entry to close factory overhead into Cost of Goods Sold.

a)  54,300 hours ´ $25 = $1,357,500

b)  $1,375,000 actual – $1,357,500 applied = $17,500 underapplied

c)

Cost of Goods Sold17,500

Factory Overhead17,500

152. The  Winston Company estimates that the factory overhead for the following year will be $1,250,000. The company has decided that the basis for applying factory overhead should be machine hours, which is estimated to be 50,000 hours. The total machine hours for the year was 54,300. The actual factory overhead for the year was $1,348,800.

a)  Determine the total factory overhead amount applied.

b)  Calculate the over or under applied amount for the year.

c)  Prepare the journal entry to close factory overhead into Cost of Goods Sold.

a)  54,300 hours ´ $25 = $1,357,500

b)  $1,348,800 actual – $1,357,500 applied = $8,700 overapplied

c)

Factory Overhead8,700

Cost of Goods Sold8,700

153. Cranston Company estimates the following overhead costs for the coming year:

Equipment depreciation      $160,000
Equipment maintenance      60,000
Supervisory salaries      40,000
Factory rent          100,000
Total      $360,000

Cranston is also budgeting $600,000 in direct labor costs and 15,000 machine hours for the coming year.

Required:
a.       Calculate the predetermined overhead rate using direct labor costs as the
      allocation base.

b.       Calculate the predetermined overhead rate using machine hours as the allocation base.

a.      $360,000 / $600,000 = $ 0.60 per direct labor dollar

b.      $360,000 / 15,000 machine hours = $24.00 per machine hour

154. Flagler Company allocates overhead based on machine hours.  They estimated overhead costs for the year to be $420,000.  Estimated machine hours were 50,000.  Actual hours and costs for the year were 46,000 machine hours and $380,000 of overhead.

Required:     

a.      Calculate the overhead application rate for the year.

b.      What is the amount of applied overhead for the year?

c.      What is the amount of under or overapplied overhead for the year? Indicate whether it is over- or underapplied.

a.      $420,000/50,000 = $8.40/machine hour

b.      $8.40 ´ 46,000 = $386,400

c.      $380,000 – $386,400 =  $6,400 overapplied

155. The Tulsa Company allocates overhead based on a predetermined overhead rate of $9.00 per direct labor hour.  Job S35 required 8 tons of direct material at a cost of $600.00 per ton and took employees who earn $17.00 per hour a total of 80 hours to complete.  What is the total cost of Job S35?

Direct materials           8 tons @ $600      $4,800
Direct labor                    80 hours @ $17         1,360
Manufacturing overhead  80 hours @ $9          720
Total cost of S35            $6,880

156. Technics Inc., a manufacturing company, utilizes job order costing.  Each division establishes its own estimates regarding overhead which are as follows:
Division A            Division B
Total estimated overhead       $128,000      $261,000
Total estimated machine hours      16,000      72,500
Total estimated direct labor costs      $155,000      $290,000

Required:
If Division A allocates overhead on the basis of machine hours, and Division B allocates overhead as a percentage of direct labor costs, what would the predetermined overhead rate be for each division?

$128,000 / 16,000 = $8 per machine hour

$261,000 / $290,000 = 90% of direct labor costs

157. Crain Company budgeted 35,000 direct labor hours and incurred 40,000 direct labor hours. It incurred $780,000 of overhead and estimated overhead was $735,000.

What is Crain’s predetermined overhead rate?  Was overhead overapplied or underapplied for the year?  By how much?

Predetermined overhead rate:  $735,000 / 35,000 = $21.00 per direct labor hour

Applied overhead:  $21.00 ´ 40,000 =      $840,000
Actual overhead                           780,000
Overapplied overhead                          $  60,000