Melinda Corporation estimates its factory overhead based on direct labor hours. Melinda estimates FOHto be $1,750,000 and direct labor hours to be 500,000.Actual information is as follows:SalesDirect LaborAdvertising Expense......Indirect Materials.Direct Materials**************$1,234,000432,000145,0001,210,000252,000Indirect Labor400,000Depreciation Expense - Factory185,000Direct labor hours...........510,000(a) Calculate the predetermined overhead rate and calculate the overhead applied during the year.Show Journal Entry(b) Determine the amount of over- or underapplied overhead and state whether it was under oroverapplied. Prepare the journal entry to eliminate the over- or underapplied overhead.

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Description: Melinda Corporation estimates its factory overhead based on direct labor hours. Melinda estimates FOHto be $1,750,000 and direct labor hours to be 500,000.Actual information is as follows:SalesDirect LaborAdvertising Expense......Indirect Materials.

Predetermined Overhead Rate is the rate which is used to allocate manufacturing overhead costs to…

Business

Accounting

Melinda Corporation estimates its factory overhead based on direct labor hours. Melinda estimates FOH to be $1,750,000 and direct labor hours to be 500,000. Actual information is as follows: Sales Direct Labor Advertising Expense....... Indirect Materials.. $1,234,000 432,000 Direct Materials Indirect Labor 145,000 1,210,000 252,000 400,000 Depreciation Expense - Factory 185,000 Direct labor hours......... 510,000 (a) Calculate the predetermined overhead rate and calculate the overhead applied during the year. Show Journal Entry (b) Determine the amount of over- or underapplied overhead and state whether it was under or overapplied. Prepare the journal entry to eliminate the over- or underapplied overhead.

Melinda Corporation estimates its factory overhead based on direct labor hours. Melinda estimates FOH to be $1,750,000 and direct labor hours to be 500,000. Actual information is as follows: Sales Direct Labor Advertising Expense....... Indirect Materials.. $1,234,000 432,000 Direct Materials Indirect Labor 145,000 1,210,000 252,000 400,000 Depreciation Expense - Factory 185,000 Direct labor hours......... 510,000 (a) Calculate the predetermined overhead rate and calculate the overhead applied during the year. Show Journal Entry (b) Determine the amount of over- or underapplied overhead and state whether it was under or overapplied. Prepare the journal entry to eliminate the over- or underapplied overhead.

FINANCIAL ACCOUNTING

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Chapter1: Financial Statements And Business Decisions

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Concept explainers

Variance Analysis

In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.

Standard Costing

The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.

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Question

Melinda Corporation estimates its factory overhead based on direct labor hours. Melinda estimates FOH
to be $1,750,000 and direct labor hours to be 500,000.
Actual information is as follows:
Sales
Direct Labor
Advertising Expense......
Indirect Materials.
Direct Materials
**************
$1,234,000
432,000
145,000
1,210,000
252,000
Indirect Labor
400,000
Depreciation Expense - Factory
185,000
Direct labor hours...........
510,000
(a) Calculate the predetermined overhead rate and calculate the overhead applied during the year.
Show Journal Entry
(b) Determine the amount of over- or underapplied overhead and state whether it was under or
overapplied. Prepare the journal entry to eliminate the over- or underapplied overhead.

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