A manufacturing company applies factory overhead based on direct labor hours.

A manufacturing company applies factory overhead based on direct labor hours. At the beginning of the year, it estimated that factory overhead costs would be $360,000and direct labor hours would be 45,000. Actual manufacturing overhead costs incurred were $377,200, and actual direct labor hours were 47,000. The entry to apply the factory overhead costs for the year would include a
a. debit to factory overhead for $377,200.
b. debit to factory overhead for $360,000.
c. credit to factory overhead for $376,000.
d. credit to factory overhead for $360,000.

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Expert Solution

c. credit to factory overhead for $376,000

Predetermined Overhead Rate

= $360,000 / 45,000 hrs

= $8 per labor hr

Applied Overhead = 47,000 hrs * $8 per hour

= $376,000

Actual Overhead = $377,200

Underapplied Overhead = $377,200 - $376,000

= $1,200

ekkarill92 answered 1 year ago

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