Question

ABC Company listed the following data for 20XX:

Budgeted factory overhead $ 1,044,000
Budgeted direct labor hours 72,000
Budgeted machine hours 24,000
Actual factory overhead 1,037,400
Actual direct labor hours 72,600
Actual machine hours 23,600
Assuming ABC Company applied overhead based on direct labor hours, the company's predetermined overhead rate is:
a. $ 43.50 per direct labor
b. $ 24.38 per direct labor
c. $ 44.24 per direct labor
d. $ 14.50 per direct labor
assuming ABC Company applied overhead based on machine hours, the company's predetermined overhead rate is:_______
a. $ 43.50
b. $ 14.38
c. $ 44.24
d. $ 14.50
Assuming ABC Company applied overhead based on direct labor hours, the overapplied / underapplied overhead is:__________
a. $ 15,300 underapplied
b. $ 15,300 overapplied
c. $ 10,800 underapplied
d. $ 10,800 overapplied
Assuming ABC Company applied overhead based on machine hours, the overapplied / underapplied overhead is:___________
a. $ 15,300 underapplied
b. $ 15,300 overapplied
c. $ 10,800 underapplied
d. $ 10,800 overapplied
Assuming ABC Company applied overhead based on direct labor hours, the journal entry to adjust overapplied / underapplied overhead would include a credit to:__________
a. work in process inventory
b. cost of goods sold
c. finished goods inventory
d. factory overhead control
Assuming ABC Company applied overhead based on machine hours, the journal entry to adjust overapplied / underapplied overhead would include a debit to:___________
a. work in process inventory
b. cost of goods sold
c. finished goods inventory
d. factory overhead control
Assuming ABC Company applied overhead based on direct labor hours, the journal entry's effect on income would:____________
a. reduce income to the correct amount
b. increase income to the correct amount
c. have no effect on income
d. understate revenue
Assuming ABC Company applied overhead based on machine hours, the journal entry would:
a. reduce income to the correct amount
b. increase income to the correct amount
c. have no effect on income
d. understate revenue

Answer 1

a. Budgeted factory overhead = 1,044,000.00

Budgeted direct labor hours = 72,000.00

Predetermined overhead rate = 1044,000/72,000

Predetermined overhead rate = $14.50

b. Budgeted factory overhead = 1,044,000.00

Budgeted machine hours= 24,000.00

Predetermined overhead rate = 1044,000/24000

Predetermined overhead rate = $43.50

c. Actual direct labor hours = 72,600.00

Applied overhead = 72600*14.50= 1,052,700.00

Actual factory overhead = 1,037,400.00

Overapplied overhead = 15,300.00

d. Actual machine hours 23,600.00

Applied overhead = 23600*43.50 = 1,026,600.00

Actual factory overhead 1,037,400.00

Underapplied overhead ($10,800.00)