Gross Company estimates that total factory overhead costs will be $2,200,000 for the year. Direct labor hours are estimated to be 400,000. For Gross Company, (a) determine the predetermined factory overhead rate using direct labor hours as the activity base, (b) determine the amount of factory overhead applied to Jobs 60 and 61 in February using the data on direct labor hours from Practice Exercise 19-2A, and (c) prepare the journal entry to apply factory overhead to both jobs in February according to the predetermined overhead rate.
Answer:
a. $5.50 per direct labor hour = $2,200,000 ÷ 400,000 direct labor hours
b. Job 60
Job 61
$ 82,500 = 15,000 hours × $5.50 per hour
99,000 = 18,000 hours × $5.50 per hour
$181,500
c. Work in Process 181,500
Factory Overhead 181,500
