Winston Company estimates that the factory overhead for the following year will be $1,134,000. The company has decided that the basis for applying factory overhead should be machine hours, which is estimated to be 37,800 hours. The total machine hours for the year were 54,300 hours. The actual factory overhead for the year was $1,652,000. Required: (a) Determine the total factory overhead amount applied. (b) Calculate the overapplied or underapplied amount for the year. Enter the amount as positive values. (c) Prepare the journal entry to close Factory Overhead into Cost of Goods Sold. Refer to the Chart of Accounts for exact wording of account titles.

Budgeted overhead = $1,134,000 Budgeted Machine Hours = 37,800 Thus Rate at which overhead will be applied per hour = Budgeted overhead / Budgeted Machine Hours =$1,134,000 / 37,800 = $30 per machine hour(a) Determine the total factory overhead amount applied. Total number of actual machine hours = 54,300 Overhead per hour = $30 Total overheads applied = $30 x 54,300 = $1,629,000 2. Calculate the overapplied or underapplied amount for the year. Enter the amount as positive values Total overheads applied = $1,629,000 Actual overheads incurred = $1,652,000 Under applied overheads = Actual overheads incurred - Total overheads applied = $ 23,000 (c) Prepare the journal entry to close Factory Overhead into Cost of Goods Sold. Refer to the Chart of Accounts for exact wording of account titles Under applied overhead = $23,000 Thus the journal entry will be passed as follows Cost of goods sold $23,000 To Factory Overhead $23,000

Answered: Winston Company estimates that the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Winston Company estimates that the factory overhead for the following year will be $1,134,000. The company has decided that the basis for applying factory overhead should be machine hours, which is estimated to be 37,800 hours. The total machine hours for the year were 54,300 hours. The actual factory overhead for the year was $1,652,000.

Required:

	(a) Determine the total factory overhead amount applied.
	(b) Calculate the overapplied or underapplied amount for the year. Enter the amount as positive values.
	(c) Prepare the journal entry to close Factory Overhead into Cost of Goods Sold. Refer to the Chart of Accounts for exact wording of account titles.

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