Question

Marquis Company estimates that annual manufacturing overhead costs will be $900,000. Estimated annual operating activity bases are direct labor cost $500,000, direct labor hours 50,000, and machine hours 100,000.

Compute the predetermined overhead rate for each activity base. (Round answers to 2 decimal places, e.g. 10.50.)
Overhead rate per direct labor cost
Marquis Company estimates that annual manufacturin
%
Overhead rate per direct labor hour
$Marquis Company estimates that annual manufacturin
Overhead rate per machine hour
$Marquis Company estimates that annual manufacturin
In January, Dieker Company requisitions raw materials for production as follows: Job 1 $900, Job 2 $1,200, Job 3 $700, and general factory use $600.
Prepare a summary journal entry to record raw materials used. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Date
Account Titles and Explanation
Debit
Credit
Jan. 31
Marquis Company estimates that annual manufacturin
Marquis Company estimates that annual manufacturin
Marquis Company estimates that annual manufacturin
Marquis Company estimates that annual manufacturin
Marquis Company estimates that annual manufacturin
Marquis Company estimates that annual manufacturin
Marquis Company estimates that annual manufacturin
Marquis Company estimates that annual manufacturin
Marquis Company estimates that annual manufacturin
Ruiz Engineering Contractors incurred service salaries and wages of $36,000 ($28,000 direct and $8,000 indirect) on an engineering project. The company applies overhead at a rate of 25% of direct labor. Record the entries to assign service salaries and wages and to apply overhead. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Account Titles and Explanation
Debit
Credit
Marquis Company estimates that annual manufacturin
Marquis Company estimates that annual manufacturin
Marquis Company estimates that annual manufacturin
Marquis Company estimates that annual manufacturin
Marquis Company estimates that annual manufacturin
Marquis Company estimates that annual manufacturin
Marquis Company estimates that annual manufacturin
Marquis Company estimates that annual manufacturin
Marquis Company estimates that annual manufacturin
(To record service salary and wages)
Marquis Company estimates that annual manufacturin
Marquis Company estimates that annual manufacturin
Marquis Company estimates that annual manufacturin
Marquis Company estimates that annual manufacturin
Marquis Company estimates that annual manufacturin
Marquis Company estimates that annual manufacturin
(To record the applied overhead)

Answer 1

Answer and Explanation:

The computation of each point is shown below:-

Overhead rate per direct labor cost = $900,000 ÷ $500,000

= 180%

Overhead rate per direct labor hour = $900,000 ÷ 50,000

= $18

Overhead rate per machine hour = $900,000 ÷ 100,000

= $9

The Journal entry is shown below:-

Work in process Inventory Dr, $2,800 ($900 + $1,200 + $700)

Manufacturing Overhead Dr, $600

To Raw Materials Inventory $3400

(Being raw material inventory is recorded)

Work in process Inventory Dr, $28,000

Manufacturing Overhead Dr, $8,000

To Service Salaries and Wages $36,000

Work in process Inventory Dr, $7,000 ($28000 × 25%)

To Manufacturing Overhead $7,000

(being the manufacturing overhead is recorded)