Question

Prepare the journal entry to apply factory overhead for April 30 according to the predetermined overhead rate. Refer to the Chart of Accounts for exact wording of account titles. Cavy Company estimates that total factory overhead costs will be $559,619 for the year. Direct labor hours are estimated to be 90,700. Required: Determine (a) the predetermined factory overhead rate; (b) the amount of factory overhead applied to Job 567 if the amount of direct labor hours is 1,200 and Job 999 if the amount of direct labor hours is 3,100; and (c) prepare the journal entry to apply factory overhead for April according to the predetermined overhead rate. Refer to the Chart of Accounts for exact wording of account titles. DATE DESCRIPTION POST. REF. DEBIT CREDIT

Answer 1

• Requirement ‘a’

A	Budgeted Overhead Cost	$559,619
B	Budgeted machine direct labor hours	90,700
C = A/B	Predetermined Factory Overhead rate	$                        6.17

• Requirement ‘b’

Working		Job 567	Job 999
A	Total direct labor hours	1200	3100
B	Predetermined Factory Overhead rate	$                        6.17	$                                     6.17
C = A x B	Overhead applied	$                7,404.00	$                           19,127.00

• Requirement ‘c’

Date	Description	Debit	Credit
30-Apr	WIP Inventory - Job 567	$                7,404.00
	WIP Inventory - Job 999	$              19,127.00
	Factory Overheads		$                           26,531.00
	(Overheads applied)

OR, simply

Date	Description	Debit	Credit
30-Apr	WIP Inventory	$                26,531.00
	Factory Overheads		$                           26,531.00
	(Overheads applied)