The company applies overhead to products at a rate of 50 percent of direct labor cost.
Transcribed Image Text:Fairfield Company applies manufacturing overhead to products at a predetermined rate of $66 per direct labor hour. Its actual
manufacturing costs for the most recent period are summarized here:
Total
Item
Description
Cost
$ 85,000
14,000
Direct materials
Used on Jobs 101 and 102
Used on multiple jobs
930 hours @ $33 per hour
Indirect materials
Hourly labor wages
$ 7,260
11,220
12,210
220 hours for Job 101
340 hours for Job 102 =
370 hours for Job 103 =
30,690
Factory supervision
Production engineer
Factory janitorial work
Selling, general, and administrative salaries
Other manufacturing overhead costs (factory rent, insurance,
depreciation, etc.)
Other selling, general, and administrative costs (office rent,
insurance, depreciation, etc.)
4,150
5,600
1,600
8,600
6,000
4,700
1. Prepare the journal entry to close the Manufacturing Overhead account balance to Cost of Goods Sold. (If no entry is required for a
transaction/event, select "No Journal Entry Required" in the first account field.)
Transcribed Image Text:Answer is not complete.
No
Transaction
General Journal
Debit
Credit
1
Work in Process Inventory
9,400
a
Raw Materials Inventory
9,400
b
Work in Process Inventory
9,400 X
Manufacturing Overhead
1,500 X
Raw Materials Inventory
10,900
Work in Process Inventory
12,300 X
C
Manufacturing Overhead
2,700 X
Wages Payable
15,000
Definition Definition Indirect costs incurred while producing goods or services. Overhead costs cannot be directly attributed to products or services. Overhead includes indirect material cost, indirect labor cost, rent, utilities expenses, and depreciation. Since these costs directly affect the profitability of a company, managing overhead becomes an important task for management.
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