Question : 172. The estimated total factory overhead cost and total machine hours : 1226879

 

172. The estimated total factory overhead cost and total machine hours for Department 40 for the current year are $250,000 and 56,250 respectively.  During January, the first month of the current year, actual machine hours used totaled 5,100 and factory overhead cost incurred totaled $22,000. 

(a)

Determine the factory overhead rate based on machine hours.

(b)

Present the entry to apply factory overhead to production in Department 40 for January.

(c)

What is the balance of Factory Overhead – Department 40 at January 31?

(d)

Does the balance of Factory Overhead – Department 40 at January 31 represent overapplied or underapplied factory overhead?

 

 

 

 

 

173. A firm produces its products by a continuous process involving three production departments, 1 through 3. Present entries to record the following selected transactions related to production during August: 

(a)

Materials purchased on account, $120,000.

(b)

Material requisitioned for use in Department 1, $125,700, of which $124,200 entered directly into the product.

(c)

Labor cost incurred in Department 1, $195,400, of which $174,000 was used directly in the manufacture of the product.

(d)

Factory overhead costs for Department 1 incurred on account, $54,700.

(e)

Depreciation on machinery in Department 1, $29,200.

(f)

Expiration of prepaid insurance chargeable to Department 1, $7,000.

(g)

Factory overhead applied to production, $106,300.

(h)

Output of Department 1 transferred to Department 2, $362,700.

 

 

 

 

 

174. Fast-Flow Paints produces mixer base paint through a two stage process, Mixing and Packaging. The following events depict the movement of value into and out of production. Journalize each event if appropriate, if not, provide a short narrative reason as to why you choose not to journalize that action.  Bob, the Production Manager, accepts an order to continue processing the current run of mixer base paint. 

(a)

$27,000.00 worth of materials are withdrawn from Raw Materials inventory. Of this amount, $25,500.00 will be issued to the Mixing Department and the balance will be issued to the Maintenance Department to be used on production line machines.

 

 

(b)

Bob calculates that labor for the period is $12,500.00. Of this value $1,750.00 is for maintenance and indirect labor.   The remainder is directly associated with mixing.

 

 

(c)

Bob, who is paid a salary but earns about $35.00 / hour, spends 1 hour inspecting the production line.

 

 

(d)

The manufacturing overhead drivers for Mixing are (1) hours of mixer time at $575.00 per hour, and material movements from Raw Materials at $125.00 per movement. An inspection of the machine timers reveals that a total of 8 hours has been consumed in making this product. An inspection of “Stocking Orders” indicates that only one material movement was utilized to “load” the raw materials. (Note: All values have been journalized to Factory Overhead, you need only apply it to the production run.)

 

 

(e)

Within Fast-Flow items are transferred between departments at a standard cost or value. This production run has created 4,015 gallons of mixer base paint. This paint is transferred to Packaging at a standard cost of $10.05 per gallon.

 

 

(f)

Packaging draws $755.00 in raw materials for packaging of this production run.

 

 

(g)

Packaging documents that 12 hours of direct labor at $10.25 per hour were consumed in the packaging of this production run.

 

 

(h)

Packaging uses a driver of direct labor hours to allocate manufacturing overhead at the rate of $25.00 per hour.

 

 

(i)

Packaging transfers these 1,005 gallons of packaged goods to Finished Goods Inventory at a standard cost of $10.25 per gallon.