(Predetermined OH rate) 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 requires 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?
Please give me the step of follows?Predetermined OH rate) 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 requires 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? 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 predetermined overhead rate.
The monthly overhead cost formula for Southwest Industrial is given as $42,900 + $6 per direct labor hour. We know that the expected annual capacity for direct labor hours is 156,000, to be incurred evenly each month.
First, we calculate the total annual overhead cost by multiplying the monthly overhead cost by 12 (months):
Total annual overhead cost = Monthly overhead cost * 12
Total annual overhead cost = ($42,900 + $6 per direct labor hour) * 12
Total annual overhead cost = $514,800 + $72,000 per direct labor hour
Then, we calculate the predetermined overhead rate by dividing the total annual overhead cost by the expected annual capacity in direct labor hours:
Predetermined overhead rate = Total annual overhead cost / Expected annual capacity in direct labor hours
Predetermined overhead rate = ($514,800 + $72,000 per direct labor hour) / 156,000 direct labor hours
Now, let's calculate the predetermined overhead rate:
Predetermined overhead rate = ($514,800 + $72,000 per direct labor hour) / 156,000 direct labor hours
Now we can substitute the given values:
Predetermined overhead rate = ($514,800 + $72,000 per direct labor hour) / 156,000 direct labor hours
To 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, we need to apply the predetermined overhead rate to the actual direct labor hours worked.
The overhead applied to Work in Process Inventory can be calculated by multiplying the actual direct labor hours worked by the predetermined overhead rate:
Overhead applied to Work in Process Inventory = Actual direct labor hours worked * Predetermined overhead rate
Overhead applied to Work in Process Inventory = 12,780 direct labor hours * Predetermined overhead rate
Now, we can substitute the given values:
Overhead applied to Work in Process Inventory = 12,780 direct labor hours * Predetermined overhead rate
To calculate the expected units produced in January, we need to divide the actual direct labor hours worked by the direct labor hours required to produce one unit:
Expected units produced = Actual direct labor hours worked / Direct labor hours required per unit
Expected units produced = 12,780 direct labor hours / 3 direct labor hours per unit
Now, we can substitute the given values:
Expected units produced = 12,780 direct labor hours / 3 direct labor hours per unit
Therefore, by following these calculations, you can determine the total overhead to be applied per unit of product in 2008, prepare journal entries to record the application of overhead, and determine the expected units produced in January.