Kayla Company uses a cost calculation system based on orders

calculating normal costs and assigning factory overhead costs based on machine hours.

At the beginning of the year, management estimated that the company would issue

Factory overhead cost was $1,980,000 and used 66,000 machine hours.

Kayla Company recorded the following events throughout the month of April:

a. Purchased 180,000 pounds of raw materials on credit at $5 per pound.

b. Issued 120,000 pounds of raw materials for production, of which 15,000 pounds were used

as indirect raw materials.

c. Indirect labor costs were $240,000 and indirect labor

of $40,000.

d. Record equipment depreciation for the month, $75,700.

e. Record insurance costs for factory property of $3,500.

f. Paid $8,500 cash for utilities and other costs for production plant.

g. Completed H11 Orders of $7,500 and G28 Orders of $77,000 during

this month and move it to the Finished Goods Inventory account.

h. Delivered G28 Orders to customers during this month. the order

billed with a margin of 35% above cost.

i. Used 7,700 work hours during April.

Requested:

1. Calculate the predetermined factory overhead rate for the year

concerned.

2. Prepare journal entries to record events that occurred during April.

3. Calculate the amount of factory overhead costs that are charged too high or too low

Answer rating: 100% (QA)

1 To calculate the predetermined factory overhead rate for the year we need to divide the estimated factory overhead cost by the estimated machine hou... View the full answer