# Q:6 The accountant of dell company is asked by management to compute FOH rate based on (a) normal

capacity, (b) expected actual capacity (c) theoretical capacity (d) average sale of the previous three year.
The accountant prepared the following summary.

capacity level
direct labour hours
FOH
FIXED
VARIABLE
toal

expected
average
normal
theoretical
actual
sale
capacity
capacity
80%
85%
90%
100%
27200
23900
30600
34000
102000
136000
238000

102000
144500
246500

102000
153000
255000

102000
170,000
272000

Required: 1) FOH rate per Direct labor hours for each capacity level (2) the amount of over or under
applied FOH cost.
Q: 6 (1)
F(FOH)
v(FOH
T(FOH)
2)
A(FOH)
A(FOH)
A) 27200 × 8.53
b) 27200 × 8.33
c) 27200 × 8.00
under obserbed FOH

80%
3.75
5
8.75

85%
3.53
5
8.53

90%
3.33
5
8.33

100%
3
5
8

85%
238000

90%
238000

100%
238000

232016
226576
5984

11424

217600
20400

Estimated FOH for the coming period. based on a production of 30. the unit cost basis for applying FOH is used. Indirect material---------------------------------------------------------------------220. These units were completed but not yet transferred to the finished goods storeroom.160. as the company handles only this one product.300.000 WIP Payroll 928000 FOH Material.000 mixers.000 Indirect labor ------------------------------------------------------------------------240.000 Depreciation -------------------------------------------------------------------------25000 Miscellaneous ----------------------------------------------------------------------55000 During the period.000/30000 = 19 per mixer 2) Under applied FOH 565300 Less 551000 14300 . pyaroll. 29000 mixers were assembled and actual FOH was 565. Q:7 (1) WIP Material 1.000 1. is as follows. etc 565300 WIP A(FOH) 551000 A(FOH) FOH 551000 928000 29000 × 40 29000 × 32 565300 551000 19 × 29000 551000 overhead rate = estimated FOH/Estimated production = 570. The cost of the parts per mixer total \$40 .160. All parts are purchased and labor is paid on the baisis of \$32 per mixer assembled. assembles and sells electric mixers.000 Light and power --------------------------------------------------------------------30.Q:7 entries for factory overhead. Speedo Co.

based on capacity utilized. c) During the year.000 direct labor hours.000 21000 UF 600000 × 2/3 .Q:8 Variance analysis procedure. b) Further analysis indicates that one third of the rate is variable – cost oriented. however. and actual factory overhead expenditures were \$631.210000 -20. (1) budgeted allowance. \$1266 favorable.000 Required: the spending and idle capacity variances. the company worked 210. (2) actual factory overhead. The kreiter company was totally destroyed by fire during june. \$779 units unfavorable and applied FOH \$16234. Q:9 A(FOH) S(V) Budget allowance IC(V) AP(FOH) Underapplied FOH (631.00 predetermined factory overhead rate.000 F 630000 1000 . The Henkel company made the following data available from its accounting records and reports: a) = 3. certain fragments of its cost records were recovered with the following data: idle capacity variance. Required. Q:8 A(FOH) 15745 S(V) 779 UF Budget allowance 14968 IC(V) -1266 F AP(FOH) 16234 Q:9 variance analysis.000 630000) 63100 610. spending variance.

Q:9.G. During june.Q9.1 WIP Material payroll FOH 281620 111700 113280 56640 FOH Various credit 58000 58000 F. 1002. Factory overhead is charged to jobs on the basis of \$3 per direct labor hour. Required: general journal entries to summarized the transaction for june. The following data were obtained from the company’s cost record’s cost records as of June 30. The Evert company uses job order costing.1 journal entries. 1003.G 102900 A/R SALEA 130.000 Total 6900 14100 12600 7500 9600 50700 102900 130. 1004. Over – or – under applied factory overhead is not closed out until the end of the year.Sold F. jobs 1001.Goods WIP 250100 250100 JOB NO D/M 1001 1002 1003 1004 1005 D/L 16300 23600 24500 15400 18200 98000 FOH 13800 28200 25200 15000 19200 101400 C. job order costing. and the customers were billed in the amounts of 48000 and \$82000 respectively. Jobs 1001 and 1002 were shipped out. Actual overhead totaled \$58000.000 37000 65900 62300 37900 47000 250100 . 1005 were completed. Job no direct materials direct labor hours 1001 16300 2300 1002 23600 4700 1004 24500 4200 1005 18200 3200 1006 13700 1080 Direct labor is charged to jobs at an overage cost of \$6 per direct labor hour.

(2) the amount of overhead to be charged to job 465 by each rate in (1) above . labor cost. \$21000.Q:4 FOH rate and application. labor cost. The cost department of the bundy company made the following estimates for the coming year. 20800 cases. (job 465 material cost .000 production. \$425000.000. materials cost. 106250 Required: (1) the factory overhead rate based on (a) labor cost (b) labor hours. \$850. \$280. total hours. and (c) material cost. factory overhead. 14800 for 3700 hours) Solution: (1) (a) (2) (a) × 100 = 170% of labor cost (b) = 4 per hours (c) × 100 = 50% M 14800 × 170% = 25160 (b) 3700 hrs × 4 = 14800 (c) 21000 × 50% = 10500 .