Question

ROK Corporation has provided you with the following information for 2010: (hint - set up T accounts for all accounts and post the transactions to the T accounts) A. Total Raw Materials Purchased and Used: $10,000 ($8,000 direct and $2,000 indirect) B. Factory Labor Incurred $8,000 ($6,000 direct and $2,000 indirect) C. Manufacturing overhead costs incurred exclusive of indirect materials and indirect labor costs: $1,000 D. Manufacturing Overhead is applied to the product based on 90% of direct labor dollars. E. $15,000 of product was completed during the period. Answer the following questions: 1. How much factory overhead was applied to the product

Answer 1

The factory overhead applied to the product is $5,400

Let understand that Factory Overhead means the total cost that is used in operating all the production segment (i.e depreciation of equipment, salary, wages, electricity) of a manufacturing company and its does not include the costs of direct labor & materials.

• It is given that:

- Factory Labor Incurred  equals $8,000 (including $6,000 direct and $2,000 indirect

- Manufacturing Overhead is applied to the product based on 90% of direct labor dollars

• Therefore, the Factory overhead applied will equals Direct factory labor incurred * 90% Overhead applied

Factory overhead applied = $6,000 * 90%

Factory overhead applied = $5,400

In conclusion, the factory overhead applied to the product is $5,400

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