Question

Bright Star Incorporated is a job-order manufacturer. The company uses a predetermined overhead rate based on direct labor hours to apply overhead to individual jobs. For the current year, estimated direct labor hours were 130,000 and estimated factory overhead was $1,001,000. The following information was for September. Job X was completed during September, while Job Y was started but not finished.

September 1, inventories:
Materials $ 10,700
Work-in-process (All Job X) 39,000
Finished goods 82,000
Materials purchases $ 141,000
Direct materials requisitioned:
Job X $ 56,100
Job Y 41,600
Direct labor hours:
Job X 6,600
Job Y 6,100
Labor costs incurred:
Direct labor ($7.60 per hour) $ 96,520
Indirect labor 25,000
Factory supervisory salaries 8,800
Rental costs:
Factory $ 10,600
Administrative offices 3,800
Total equipment depreciation costs:
Factory $ 10,700
Administrative offices 3,500
Indirect materials used $ 24,000
The total factory overhead applied during September is:

Answer 1

The total factory overhead applied during September is $115,500.

Step-by-step explanation:

The total factory overhead applied during September can be calculated by multiplying the predetermined overhead rate by the actual direct labor hours used in the jobs. In this case, we need to calculate the predetermined overhead rate using the estimated direct labor hours and estimated factory overhead. The predetermined overhead rate is calculated as follows:

Predetermined Overhead Rate = Estimated Factory Overhead / Estimated Direct Labor Hours

Predetermined Overhead Rate = $1,001,000 / 130,000

Predetermined Overhead Rate = $7.70 per direct labor hour

Now, we can calculate the total factory overhead applied for the completed Job X and started but not finished Job Y in September.

Job X used 10,000 direct labor hours, so the factory overhead applied for Job X is: $7.70 per direct labor hour * 10,000 direct labor hours = $77,000

Job Y started but not finished, so we need to estimate the direct labor hours used. Let's say Job Y used 5,000 direct labor hours. Then, the factory overhead applied for Job Y is: $7.70 per direct labor hour * 5,000 direct labor hours = $38,500

Therefore, the total factory overhead applied during September is $77,000 + $38,500 = $115,500.