Prunka's Pranks, Inc., manufactures toys and sells them to Games-R-Fun retail stores throughout the United States. In 19X9, Prunka...

 

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Prunka's Pranks, Inc., manufactures toys and sells them to Games-R-Fun retail stores throughout the United States. In 19X9, Prunka estimated that the maximum capacity for Ready-Set-Go, a new and challenging game, would be 170,000 units. The normal capacity for this game in 19X9 was 135,000 units. The actual output was 142,575 units. The esti mated factory overhead for Ready-Set-Go during the year was Variable overhead Fixed overhead. Semivariable overhead: 0-80.000 units. 80,001-160,000 units 160,001-240,000 units 240,001 units up. Estimated machine hours. Estimated direct labor hours. Estimated materials cost. Estimated direct labor costs Prunka's analysts used the following normal capacity data in order to establish a base for applying factory overhead during 19X9 Machine hours.. Direct labor hours Materials cost Direct labor cost 5.54 unit 36,500 10,000 20,000 30,000 40,000 1 Units of production 2 Machine hours The actual data for 19X9 were the following: 3 Direct labor hours 4 Direct materials cost 5 Direct labor cost 61,500 96.720 62,000 96,720 $120,000 $220,000 $125,500 $213,000 Required: a Using 19X9 normal capacity, compute the total estimated factory overhead cost for Ready-Set Go. Determine the rate used during the year to apply factory overhead and compute the total factory overhead applied, using each of the following bases b Compute the same items as required in (a), using maximum capacity instead of normal capacity. < PROBLEM 4-2 JOURNAL ENTRIES-FACTORY OVERHEAD Assume the following information for the M.L.&0. Corporation, Year 2 Estimated factory overhead: Fixed Variable Expected capacity..... Estimated direct labor hours. Estimated machine hours... The following data were supplied for the month of March. Year 2 Actual direct labor hours. Actual machine hours Actual overhead $76,000 $6/unit 30,000 units 25,000 20,000 2,400 2.200 $25,000 M.L&0. uses short-run capacity to estimate its factory overhead. The company uses an Applied Factory Overhead account and an Over or Underapplied Factory Overhead ac- count. At the end of the month, the Over- or Underapplied Factory Overhead account is closed to the Cost of Goods Sold account. Required: Using the data given, prepare two sets of journal entries-one using direct labor hours and the other using machines hours-to apply the factory overhead to the units produced. Do the following: a Record the applied factory overhead. b Record the actual factory overhead. e Close the Applied Factory Overhead and the Factory Overhead Control accounts. d Close the Over- or Underapplied Factory Overhead account.

Answer rating: 100% (QA)

a Calculation of total estimated factory overhead cost for Ready Set Go using 19X9 normal capacity Variable overhead cost per unit 5 54 Fixed overhead View the full answer