### Question 39**Mango Company applies overhead based on direct labor costs. For the current year, Mango Company estimated total overhead costs to be $300,000, and direct labor costs to be $150,000. Actual overhead costs for the year totaled $330,000, and actual direct labor costs totaled $170,000. At year-end, the balance in the Factory Overhead account is a:****Multiple Choice:**- $330,000 Debit balance- $170,000 Debit balance- $10,000 Credit balance- $340,000 Credit balance---#### Explanation of Terms:- **Overhead Costs**: Indirect expenses related to the production process, such as utilities, rent, and salaries of supervisory staff.- **Direct Labor Costs**: Wages paid to workers directly involved in the manufacturing process.- **Factory Overhead Account**: An accounting record used to accumulate all manufacturing costs other than direct materials and direct labor.#### Calculating Overhead Application Rate:1. **Estimated Data:** - Estimated Total Overhead Costs: $300,000 - Estimated Direct Labor Costs: $150,000 Overhead Application Rate = Estimated Overhead Costs / Estimated Direct Labor Costs \[ \text{Overhead Application Rate} = \frac{300,000}{150,000} = 2 \quad (\text{or 200%}) \]2. **Actual Data:** - Actual Overhead Costs: $330,000 - Actual Direct Labor Costs: $170,000 Applied Overhead = Overhead Application Rate * Actual Direct Labor Costs \[ \text{Applied Overhead} = 2 \times 170,000 = 340,000 \]#### Determining the Balance:- **Actual Overhead**: $330,000- **Applied Overhead**: $340,000Factory Overhead Account Balance = Applied Overhead - Actual Overhead\[\text{Factory Overhead Account Balance} = \$340,000 - \$330,000 = \$10,000 \text{ Credit Balance}\]---### Answer:- $10,000 Credit balance

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Description: ### Question 39**Mango Company applies overhead based on direct labor costs. For the current year, Mango Company estimated total overhead costs to be $300,000, and direct labor costs to be $150,000. Actual overhead costs for the year totaled $330,00

The factory overheads are the costs incurred on the production of the goods. It includes the…

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Mango Company applies overhead based on direct labor costs. For the current year, Mango Company estimated total overhead costs to be $300,000, and direct labor costs to be $150,000. Actual overhead costs for the year totaled $330,000, and actual direct labor costs totaled $170,000. At year-end, the balance in the Factory Overhead account is a: Multiple Choice O O O $330,000 Debit balance. $170,000 Debit balance. $10,000 Credit balance. $340,000 Credit balance.

Mango Company applies overhead based on direct labor costs. For the current year, Mango Company estimated total overhead costs to be $300,000, and direct labor costs to be $150,000. Actual overhead costs for the year totaled $330,000, and actual direct labor costs totaled $170,000. At year-end, the balance in the Factory Overhead account is a: Multiple Choice O O O $330,000 Debit balance. $170,000 Debit balance. $10,000 Credit balance. $340,000 Credit balance.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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