For 2008, Southwest Industrial has a monthly overhead cost formula of $42,900 + $6 per direct labor hour. The firm's 2008 expected annual capacity is 156,000 direct labor hours, to be incurred evenly each month. Making one unit of the company's product requres three direct labor hours. Determine the total overhead to be applied per unit of product in 2008. Prepare journal entries to record the application of overhead to Work in Process Inventory and the incurrence of $128.550 of actual overhead in January 2008, when 12,780 direct labor hours were worked. Given the actual direct labor hours in part (b), how many units would you have expected to be produced in January?

To determine the total overhead to be applied per unit of product in 2008, we need to calculate the overhead rate per direct labor hour.

1. First, find the fixed portion of the monthly overhead cost formula:
Fixed portion = $42,900

2. Next, calculate the variable portion of the monthly overhead cost formula per direct labor hour:
Variable portion = $6 per direct labor hour

3. Add the fixed and variable portions together to find the total overhead rate per direct labor hour:
Total overhead rate = Fixed portion + Variable portion

Total overhead rate = $42,900 + ($6 per direct labor hour)

Now, let's calculate the total overhead to be applied per unit of product using the given information:

4. Determine the labor hours required to make one unit of the product:
Labor hours per unit = 3 direct labor hours

5. Multiply the total overhead rate per direct labor hour by the labor hours per unit to get the total overhead per unit:
Total overhead per unit = Total overhead rate × Labor hours per unit

Total overhead per unit = ($42,900 + $6 per direct labor hour) × 3 direct labor hours

Now, we can prepare the journal entries to record the application of overhead to Work in Process Inventory and the incurrence of actual overhead in January 2008:

6. Journal entry to record the application of overhead to Work in Process Inventory:
Debit: Work in Process Inventory
Credit: Manufacturing Overhead

Amount: Total overhead incurred in January

In this case, the amount would be $128,550, as given.

7. Journal entry to record the incurrence of actual overhead in January 2008:
Debit: Manufacturing Overhead
Credit: Accounts Payable (or Cash)

Amount: $128,550

To calculate the number of units expected to be produced in January, we need to use the actual direct labor hours worked and the labor hours required per unit:

8. Calculate the number of units using the actual direct labor hours in January:
Number of units = Actual direct labor hours ÷ Labor hours per unit

Given the actual direct labor hours worked in January are 12,780, you can divide this by the labor hours per unit (3 direct labor hours) to find the number of units expected to be produced in January.