Rothchild Company estimates that total factory overhead costs will be $810,000 for the year. Direct labor hours are estimated to be 90,000. For Rothchild 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 40 and 42 in August using the data on direct labor hours from Practice Exercise 19-2B, and (c) prepare the journal entry to apply factory overhead to both jobs in August according to the predetermined overhead rate.
Answer:
a. $9.00 per direct labor hour = $810,000 ÷ 90,000 direct labor hours
b. Job 40
Job 42
$31,500 = 3,500 hours × $9.00 per hour
37,800 = 4,200 hours × $9.00 per hour
$69,300
c. Work in Process 69,300
Factory Overhead 69,300
