Factory overhead rates, entries, and account balance

Factory overhead rates, entries, and account balance


Tiny Biggs Company operates two factories. The company applies factory overhead to jobs on the basis of machine hours in Factory 1 and on the basis of direct labor hours in Factory 2. Estimated factory overhead costs, direct labor hours, and machine hours are as follows:


Factory 1                Factory 2


year  beginning  September 1                                            $1,456,000                                                                                                                       $954,000 Estimated direct labor hours for year                                                                                                                                                                                                                             26,500 Estimated machine hours for year                                                                                                52,000

Actual factory overhead costs for  September                 $117,600                                                                                                                           $102,350 Actual direct labor hours for  September                                                                                                                                                                                                                                2,795 Actual machine hours for  September                                                                                  4,250


a.    Determine the factory overhead rate for Factory 1.

b.    Determine the factory overhead rate for Factory 2.

c.     Journalize the entries to apply factory overhead to production in each factory for September.

d.    Determine the balances of the factory overhead accounts for each factory as of September 30, and indicate whether the amounts represent overapplied or under­ applied factory overhead.

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