Rothchild Company estimates that total factory overhead costs will be $810,000 for the year. Direct labor hours

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  

At the end of August, Rothchild Company had completed Jobs 40 and 42. Job 40 is for 10,000 units, and Job 42 is for 11,000 units

At the end of August, Rothchild Company had completed Jobs 40 and 42. Job 40 is for 10,000 units, and Job 42 is for 11,000 units. Using the data from Practice Exercises 19-1B, 19-2B, and 19-4B, determine (a) the balance on the job cost sheets for Jobs 40 and 42 at the end of August and (b) the cost per unit for Jobs 40 and 42 at the end of August.

Answer:

a. Job 40 Job 42 
Direct materials……………………………………………………… $  40,000 $  86,800 
Direct labor…………………………………………………………… 87,500 98,700 
Factory overhead……………………………………………………     31,500     37,800 
Total costs…………………………………………………………  $159,000 $223,300 
b. Job 40 
Job 42 
$15.90 = $159,000 ÷ 10,000 units 
$20.30 = $223,300 ÷ 11,000 units