Homework SourseFairfield Company applies manufacturing overhead to products
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:
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.)
Journal entry worksheet
Record the transfer of manufacturing overhead account balance to cost of goods sold.
Note: Enter debits before credits.
| Item | Description | Total Cost | |||
| Direct materials | Used on Jobs 101 and 102 | 72,000 | |||
| Indirect materials | Used on multiple jobs | 14,600 | |||
| Hourly labor wages | 920 hours @ $33 per hour | ||||
| 170 hours for Job 101 = | $ | 5,610 | |||
| 320 hours for Job 102 = | 10,560 | ||||
| 430 hours for Job 103 = | 14,190 | 30,360 | |||
| Factory supervision | 4,150 | ||||
| Production engineer | 5,000 | ||||
| Factory janitorial work | 1,500 | ||||
| Selling, general, and administrative salaries | 8,400 | ||||
| Other manufacturing overhead costs (factory rent, insurance, depreciation, etc.) | 6,200 | ||||
| Other selling, general, and administrative costs (office rent, insurance, depreciation, etc.) | 4,100 | ||||
Solution
Actual manufacturing overhead =14600 Indirect material +4150 factory supervision+5000 production engineer
+ 1500janitorial+6200 other overhead
=31450
Applied overhead : Direct labor hours *rate
= 920*66
= $ 60720
Overhead overapplied =Actual -applied
= 31450-60720
= -29270
| Account | Debit | credit |
| Manufacturing overhead | 29270 | |
| cost of good sold | 29270 | |
| [Being overhead overapplied closed] |
