Wyatt Company has decided to use a predetermined rate to assign factory overhead to production. The following predictions have been made for the year:

Total factory overhead costs $150,000

Direct labor hours 40,000 hours

Direct labor costs $200,000

Machine hours 60,000 hours

Required:

a.	Compute the predetermined factory overhead rate under three different bases: (1) direct labor hours, (2) direct labor costs, and (3) machine hours.
b.	Assume that actual factory overhead was $152,500 and that Wyatt elected to apply factory overhead to Work in Process based on direct labor hours. If actual direct labor was 42,000 hours for the year, was factory overhead over- or underapplied? By how much?
c.	Wyatt Company follows the policy of writing off any under- or overapplied factory overhead balance to Cost of Goods Sold at the end of the year. Make the journal entry necessary at the end of the year to dispose of the factory overhead balance determined in part (b).

Answer rating: 100% (QA)

Lets go through each part of the problem step by step a Compute the predetermined factory overhead rate under three different bases 1 direct labor hou... View the full answer