Principles of Cost Accounting: P4-11 The following information, taken from the books of David

Principles of Cost Accounting

P4-11 Determining overhead rate using direct labor cost, direct labor hour, and machine hour methods
The following information, taken from the books of David Company, represents the operations for the month of January:
Bronzing Casting Finishing
Materials used $20,000 $10,000 $10,000
Direct labor cost $8,000 $5,000 $9,000
Direct labor hours 1,000 500 1,620
Machine hours 4,000 5,000 2,025
Factory overhead $20,000 $10,000 $16,200

The job cost system is used, and the February cost sheet for Job M45 shows the following:
Bronzing Casting Finishing
Materials $20.00 $40.00 $20.00
Direct labor cost $64.00 $60.00 $54.00
Direct labor hours 8 6 6
Machine hours 2 3 1

The following actual information was accumulated during February:
Bronzing Casting Finishing
Direct labor hours 15,000 9,800 20,000
Factory overhead $340,000 $200,000 $330,000

1. Using the January data, ascertain the factory overhead application rates to be used during February, based on the following:
a. Direct labor cost
b. Direct labor hours
c. Machine hours
2. Prepare a schedule showing the total production cost of Job M45 under each method of applying factory overhead.
3. Prepare the entries to record the following for February operations:
a. Recording the liability for total factory overhead.
b. Distribution of factory overhead to the departments.
c. Application of factory overhead to the work in process, using direct labor hours. (Use the predetermined rate calculated in 1, and separate applied overhead accounts for each department)
d. Closing of the applied factory overhead accounts.
e. Recording under- and overapplied factory overhead and closing the actual factory overhead accounts.
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