Chapter 17, Problem 17.4BPE

(a)

To determine

Predetermined factory overhead rate

Normally, factory overhead costs are applied or allocated to cost of job based on predetermined factory overhead rate. The formula to calculate the predetermined factory overhead rate is as follows:

$\text{Predetermined factory overhead rate = }\frac{\text{Estimated total factory overhead rate}}{\text{Estimated activity rate}}$

To determine: the predetermined factory overhead rate of Company R.

(b)

To determine

the amount of factory overhead applied to Jobs 40 and 42 in August.

(c)

To determine

To record: Journal entry the factory overhead applied in the books of Company R.