Lizzie Incorporated processes large pieces of granite into finely finished countertops. Production occurs in two phases...

 

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Lizzie Incorporated processes large pieces of granite into finely finished countertops. Production occurs in two phases - sawing and polishing. The sawing phase is almost entirely automated and costs are largely driven by processing time on a computerized sawing machine. Polishing is a labor Intensive process, and the amount of time on a particular job varies considerably based on the intrinsic stone quality and the desired sheen for a particular job. These estimates were used to determine the applicable factory overhead application rates: Sawing Polishing Direct labor 20,000 $ 1,000,000 Direct materials 75,000 60,000 Factory overhead Direct labor hours 300,000 200,000 30,000 75,000 Machine hours 45,000 20,000 At the end of the year, the company determined that actual data was as follows: Sawing Polishing Direct labor 30,000 926,000 Direct materials 24 73,400 54,000 24 290,000 %24 225,000 Factory overhead 24,000 60,500 Direct labor hours Sawing machine hours 44,500 12,000 (a) Calculate the predetermined factory overhead allocation rate based on factory-wide direct material costs. Journalize the application of overhead for the year and any true-up of under or over-applied factory overhead at the end of the year, if necessary. Show the journal entries and the general ledger T account for the Factory Overhead control account. (10 points) Calculate the predetermined factory overhead allocation rate based on a departmental basis using machine hours for the Sawing departent and direct labor hours for the Polishing department. Journalize the application of overhead for the year and any true-up of under or over-applied factory overhead at the end of the year, if necessary. Show the journal entries and the general ledger T account for the Factory Overhead control account. (15 pooints) (b) Lizzie Incorporated processes large pieces of granite into finely finished countertops. Production occurs in two phases - sawing and polishing. The sawing phase is almost entirely automated and costs are largely driven by processing time on a computerized sawing machine. Polishing is a labor Intensive process, and the amount of time on a particular job varies considerably based on the intrinsic stone quality and the desired sheen for a particular job. These estimates were used to determine the applicable factory overhead application rates: Sawing Polishing Direct labor 20,000 $ 1,000,000 Direct materials 75,000 60,000 Factory overhead Direct labor hours 300,000 200,000 30,000 75,000 Machine hours 45,000 20,000 At the end of the year, the company determined that actual data was as follows: Sawing Polishing Direct labor 30,000 926,000 Direct materials 24 73,400 54,000 24 290,000 %24 225,000 Factory overhead 24,000 60,500 Direct labor hours Sawing machine hours 44,500 12,000 (a) Calculate the predetermined factory overhead allocation rate based on factory-wide direct material costs. Journalize the application of overhead for the year and any true-up of under or over-applied factory overhead at the end of the year, if necessary. Show the journal entries and the general ledger T account for the Factory Overhead control account. (10 points) Calculate the predetermined factory overhead allocation rate based on a departmental basis using machine hours for the Sawing departent and direct labor hours for the Polishing department. Journalize the application of overhead for the year and any true-up of under or over-applied factory overhead at the end of the year, if necessary. Show the journal entries and the general ledger T account for the Factory Overhead control account. (15 pooints) (b)

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