Answer:
Eclipse Solar Company
a. Factory overhead rate for Factory 1 is $23.13
b. Factory overhead rate for Factory 2 is $35.20
c. Journal Entries:
August 31:
Debit Work in Process Factory 1 $1,491,885
Credit Factory Overhead $1,491,885
Debit Work in Process Factory 2 $3,696,000
Credit Factory Overhead $3,696,000
d. Balances of the factory overhead accounts:
Factory 1 $23,915 underapplied
Factory 2 $89,700 overapplied
Explanation:
a) Data and Calculations:
Factory 1 Factory 2
Overhead application basis machine hrs direct labor hrs
Estimated overhead costs $18,500,000 $44,000,000
Direct labor hours 800,000
Factory overhead rate $23.125
Machine hours 1,250,000
Factory overhead rate $35.20
August:
Actual overhead costs $1,515,800 $3,606,300
Actual direct labor
hours for August 64,500
Actual machine hours for August 105,000
Application of overhead to production for August:
Factory 1 = $1,491,885 (64,500 * $23.13)
Factory 2 $3,696,000 (105,000 * $35.20)
Factory overhead accounts:
Factory 1 Factory 2
Actual overhead costs $1,515,800 $3,606,300
Applied overhead costs $1,491,885 $3,696,000
Under/(Over)-Applied $23,915 $89,700 Overapplied
