Question

Winston Company estimates that the factory overhead for the following year will be $1,250,000. The company has decided that the basis for applying factory overhead should be machine hours, which is estimated to be 50,000 hours. The total machine hours for the year were 54,300 hours. The actual factory overhead for the year was $1,348,800.a. Determine the total factory overhead amount applied.$b. Calculate the over- or underapplied amount for the year.$c. Prepare the journal entry to close factory overhead into Cost of Goods Sold.

Answer 1

Answer:

(a) $1,357,500

(b) $8,700

Explanation:

(a) Predetermined overhead rate:

= Estimated overhead ÷ Estimated machine hours

= $1,250,000 ÷ 50,000

= $25 per hour

Overhead applied:

= Predetermined overhead rate × Actual machine hour

= $25 per hour × 54,300 hours

= $1,357,500

(b)Over applied overhead:

= Actual overhead - Applied overhead

= $1,348,800 - $1,357,500

= -$8,700

(c) The Journal entry is as follows:

Manufacturing overhead A/c Dr. $8,700

     To cost of goods sold                         $8,700

(To record the factory overhead into Cost of Goods Sold)