Factory Overhead Rates, Entries, and Account Balance Sundance Solar 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 Estimated factory overhead cost for fiscal year beginning March 1 $12,900,000 $10,200,00 Estimated direct labor hours for year 250,000 Estimated machine hours for year 600,000 Actual factory overhead costs for March $1,082,500 $840,833 Actual direct labor hours for March 20,416 Actual machine hours for March 50,833 a. Determine the factory overhead rate for Factory 1. Round the answer to two decimal places. per machine hour b. Determine the factory overhead rate for Factory 2. Round the answer to two decimal places. per direct labor hour Feedback Check My Work c. Journalize the entries to apply factory overhead to production in each factory for March. When required, round your answers to the nearest dollar.
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.

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GenX Furnishings manufactures designer furniture. GenX Furnishings uses a job order cost system. Balances on June 1 from the materials ledger are as follows:
Fabric
$40,500
Polyester filling
28,600
Lumber
62,400
Glue
6,550
The materials purchased during June are summarized from the receiving reports as follows:
Fabric
$440,000
Polyester filling
180,000
Lumber
360,000
Glue
40,000
Materials were requisitioned to individual jobs as follows:
Polyester
Fabric
Filling
Lumber
Glue
Total
Dob 601
$205,000
$75,000
$120,000
$400,000
Dob 602
110,000
36,000
88,000
234,000
Dob 603
130,000
55,000
125,000
310,000
Factory overhead-indirect
materials
$34,800
34,800
Total
$445,000
$166,000
$333,000
$34,800 $978,800
The glue is not a significant cost, so it is treated as indirect materials (factory overhead).
a. Journalize the entry to record the purchase of materials in June.
Materials
a.
Accounts Payable
b. Journalize the entry to record the requisition of materials in June. If an amount box does not require an entry, leave it blank.
b. Work in Process
Factory Overhead
Materials
Feedback
Check My Work
b. Increase the work in process for direct materials for the Jobs and factory overhead for the indirect materials.
c. Determine the June 30 balances that would be shown in the materials ledger accounts.
Fabric
Polyester Filling
Lumber
Glue
Balance, June 30
00"
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