Problem 7 Factory Overhead Rate John Corp. makes bottles using the latest automated technology. The company applies factory overhead cost to products on the basis of machine hours. The following are estimate used to determine factory overhead rate at the start of the year. Machine hours Factory overhead cost 150,000 1,800,000 The company cost records shows the following actual cost incurred for the year. Machine hours Factory overhead cost Raw Materials Work in Process includes FOH applied of P72,000) Finished Goods Bincludes FOH applied of P360,000) Cost of Goods Sold (includes FOH applied of P1,008,000) Required: 1. Compute the factory overhead rate 2. Compute the over or under-applied factory overhead 120,000 1,700,000 60,000 200,000 1,000,000 2,800,000 3. Journal entry to close the variance to Cost of Goods Sold 4. Journal entry to close the variance to Cost of Goods Sold, Finished Goods and Work in Process account.