Question

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 $337,100 and direct labor hours would be 47,800. Actual manufacturing overhead costs incurred were $315,000, and actual direct labor hours were 51,900. The entry to apply the factory overhead costs for the year would include a:________

Answer 1

WIP inventory 366,014.43 debit

Manufacturing Overhead 366,014.43 credit

Step-by-step explanation:

we solve first, for the manufacturing predetermined rate:

`(Cost\: Of \:Manufacturing \:Overhead)/(Cost \:Driver)= Overhead \:Rate`

we divide the expected overhead cost with the direct labor estimated

337,100 / 47,800 = 7,052301255230126

Then we multiply this rate by the actual direct labor incurred during the period:

7,052301255230126 x 51,900 = $366.014,4351

The entry for the applied overhead will be a debit to work in progress and a credti to factory overhead