The cost accountant for River Rock Beverage Co. estimated that total factory overhead cost for the Blending Department for the coming fiscal year beginning February 1 would be $130,000, and total direct labor costs would be $100,000. During February, the actual direct labor cost totaled $12,000, and factory overhead cost incurred totaled $15,950. Required:
a. What is the predetermined factory overhead rate based on direct labor cost?
b. Journalize the entry to apply factory overhead to production for February 28. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for spaces or journal explanations. Every line on a journal page is used for debit or credit entries. Do not add explanations or skip a line between journal entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.
c. What is the February 28 balance of the account Factory Overhead-Blending Department?
d. Does the balance in part (c) represent over- or underapplied factory overhead?
CHART OF ACCOUNTS
River Rock Beverage Co.
General Ledger
ASSETS
110 Cash
121 Accounts Receivable
125 Notes Receivable
126 Interest Receivable
131 Materials
141 Work in Process-Blending Department
142 Work in Process-Filling Department
151 Factory Overhead-Blending Department
152 Factory Overhead-Filling Department
161 Finished Goods
171 Supplies
172 Prepaid Insurance
173 Prepaid Expenses
181 Land
191 Factory
192 Accumulated Depreciation-Factory
LIABILITIES
210 Accounts Payable
221 Utilities Payable
231 Notes Payable
236 Interest Payable
251 Wages Payable
EQUITY
311 Common Stock
340 Retained Earnings
351 Dividends
390 Income Summary
CHART OF ACCOUNTS
River Rock Beverage Co.
General Ledger
ASSETS
110 Cash
121 Accounts Receivable
125 Notes Receivable
126 Interest Receivable
131 Materials
141 Work in Process-Blending Department
142 Work in Process-Filling Department
151 Factory Overhead-Blending Department
152 Factory Overhead-Filling Department
161 Finished Goods
171 Supplies
172 Prepaid Insurance
173 Prepaid Expenses
181 Land
191 Factory
192 Accumulated Depreciation-Factory
LIABILITIES
210 Accounts Payable
221 Utilities Payable
231 Notes Payable
236 Interest Payable
251 Wages Payable
EQUITY
311 Common Stock
340 Retained Earnings
351 Dividends
390 Income Summary
REVENUE
410 Sales
610 Interest Revenue
EXPENSES
510 Cost of Goods Sold
520 Wages Expense
531 Selling Expenses
532 Insurance Expense
533 Utilities Expense
534 Supplies Expense
540 Administrative Expenses
561 Depreciation Expense-Factory
590 Miscellaneous Expense
710 Interest Expense
X
Starting Question
a. What is the predetermined factory overhead rate based on direct labor cost?
%
b. Journalize the entry to apply factory overhead to production for February 28. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for spaces or journal explanations. Every line on a journal page is used for debit or credit entries. Do not add explanations or skip a line between journal entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.
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JOURNAL
ACCOUNTING EQUATION
DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY
1
2
c. What is the February 28 balance of the account Factory Overhead-Blending Department?
Amount:
REVENUE
410 Sales
610 Interest Revenue