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

Q:7 entries for factory overhead. Speedo Co. assembles and sells electric mixers. All parts are purchased
and labor is paid on the baisis of $32 per mixer assembled. The cost of the parts per mixer total $40 . as
the company handles only this one product, the unit cost basis for applying FOH is used. Estimated FOH
for the coming period, based on a production of 30,000 mixers, is as follows.
Indirect material---------------------------------------------------------------------220,000
Indirect labor ------------------------------------------------------------------------240,000
Light and power --------------------------------------------------------------------30,000
Depreciation -------------------------------------------------------------------------25000
Miscellaneous ----------------------------------------------------------------------55000

During the period, 29000 mixers were assembled and actual FOH was 565,300. These units were
completed but not yet transferred to the finished goods storeroom.
Q:7 (1)
WIP
Material

1,160,000
1,160,000

WIP
Payroll

928000

FOH
Material, pyaroll, 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 = 570,000/30000 = 19 per mixer

2) Under applied FOH

565300

Less

551000

14300

Q:8 Variance analysis procedure. The kreiter company was totally destroyed by fire during june,
however, certain fragments of its cost records were recovered with the following data: idle capacity
variance, $1266 favorable; spending variance, $779 units unfavorable and applied FOH $16234.
Required; (1) budgeted allowance, based on capacity utilized. (2) actual factory overhead.
Q:8

A(FOH)

15745

S(V)

779 UF

Budget allowance

14968

IC(V)

-1266 F

AP(FOH)

16234

Q:9 variance analysis. The Henkel company made the following data available from its accounting
records and reports:
a)

= 3.00 predetermined factory overhead rate.

b) Further analysis indicates that one third of the rate is variable cost oriented.
c) During the year, the company worked 210,000 direct labor hours, and actual factory overhead
expenditures were $631,000
Required: the spending and idle capacity variances.
Q:9

A(FOH)
S(V)
Budget allowance
IC(V)
AP(FOH)
Underapplied FOH (631,000 630000)

63100
610,000

21000 UF
600000 2/3 - 210000
-20,000 F

630000
1000

Q9.1 journal entries; job order costing. The Evert company uses job order costing. The following data
were obtained from the companys cost records cost records as of June 30;
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. Factory overhead is
charged to jobs on the basis of $3 per direct labor hour. Actual overhead totaled $58000.
During june, jobs 1001, 1002, 1003, 1004, 1005 were completed. Jobs 1001 and 1002 were shipped out,
and the customers were billed in the amounts of 48000 and $82000 respectively.
Required: general journal entries to summarized the transaction for june. Over or under applied
factory overhead is not closed out until the end of the year.
Q:9.1
WIP
Material
payroll
FOH

281620
111700
113280
56640

FOH
Various credit

58000
58000

F.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.G.Sold
F.G

102900

A/R
SALEA

130,000

Total
6900
14100
12600
7500
9600
50700

102900

130,000

37000
65900
62300
37900
47000
250100

Q:4 FOH rate and application. The cost department of the bundy company made the following estimates
for the coming year; factory overhead, $425000; materials cost, $850,000 production, 20800 cases;
labor cost, $280,000; total hours, 106250
Required: (1)

the factory overhead rate based on (a) labor cost (b) labor hours, and (c) material cost.

(2) the amount of overhead to be charged to job 465 by each rate in (1) above . (job 465 material cost ,
$21000; labor cost, 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