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 $348,000 and direct labor hours would be 42,900. Actual manufacturing overhead costs incurred were $322,800, and actual direct labor hours were 54,500. The journal entry to apply the factory overhead costs for the year would include a Oa, credit to Factory Overhead for $348,000 Ob. debit to Factory Overhead for $441,995 Oc, credit to Factory Overhead for $441,995 Od, debit to Factory Overhead for $322,800

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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**Transcription for Educational Website**

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**Application of Factory Overhead in Manufacturing**

A manufacturing company applies factory overhead based on direct labor hours. At the beginning of the year, it was estimated that factory overhead costs would be $348,000 and direct labor hours would be 42,900. Actual manufacturing overhead costs incurred were $322,800, and actual direct labor hours were 54,500. The journal entry to apply the factory overhead costs for the year would include:

- **a.** credit to Factory Overhead for $348,000
- **b.** debit to Factory Overhead for $441,995
- **c.** credit to Factory Overhead for $441,995
- **d.** debit to Factory Overhead for $322,800

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This problem involves understanding how to apply factory overhead costs based on estimated versus actual labor hours and costs. Selecting the correct option requires understanding the principles of cost accounting and the method used for applying overhead costs.
Transcribed Image Text:**Transcription for Educational Website** --- **Application of Factory Overhead in Manufacturing** A manufacturing company applies factory overhead based on direct labor hours. At the beginning of the year, it was estimated that factory overhead costs would be $348,000 and direct labor hours would be 42,900. Actual manufacturing overhead costs incurred were $322,800, and actual direct labor hours were 54,500. The journal entry to apply the factory overhead costs for the year would include: - **a.** credit to Factory Overhead for $348,000 - **b.** debit to Factory Overhead for $441,995 - **c.** credit to Factory Overhead for $441,995 - **d.** debit to Factory Overhead for $322,800 --- This problem involves understanding how to apply factory overhead costs based on estimated versus actual labor hours and costs. Selecting the correct option requires understanding the principles of cost accounting and the method used for applying overhead costs.
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