Predetermined Factory Overhead Rate
Poehling Medical Center has a single operating room that is used by local physicians to perform
surgical procedures. The cost of using the operating room is accumulated by each patient
procedure and includes the direct materials costs (drugs and medical devices), physician surgical
time, and operating room overhead. On January 1 of the current year, the annual operating room
overhead is estimated to be:
Disposable supplies
Depreciation expense
Utilities
Nurse salaries
Technician wages
Total operating room overhead
$196,400
35,400
20,600
295,000
96,600
$644,000
The overhead costs will be assigned to procedures, based on the number of surgical room hours.
Poehling Medical Center expects to use the operating room an average of eight hours per day,
seven days per week. In addition, the operating room will be shut down two weeks per year for
general repairs.
a. Determine the predetermined operating room overhead rate for the year.
$
per hour
b. Bill Harris had a 4-hour procedure on January 22. How much operating room overhead would
be charged to his procedure, using the rate determined in part (a)?
$
c. During January, the operating room was used 194 hours. The actual overhead costs incurred
for January were $43,600. Determine the overapplied operating overhead or underapplied
operating overhead for the period. Enter your answer as a positive number.
$
Old School Publishing Inc. began printing operations on January 1. Jobs 301 and 302 were
completed during the month, and all costs applicable to them were recorded on the related cost
sheets. Jobs 303 and 304 are still in process at the end of the month, and all applicable costs
except factory overhead have been recorded on the related cost sheets. In addition to the
materials and labor charged directly to the jobs, $7,600 of indirect materials and $12,100 of
indirect labor were used during the month. The cost sheets for the four jobs entering production
during the month are as follows, in summary form:
Job 301
Job 302
Direct materials $10,600
Direct materials $21,900
Direct labor
8,300
Direct labor
15,000
Factory overhead6,557
Factory overhead11,850
Total
$25,457Total
$48,750
CHART OF ACCOUNTS
Old School Publishing Inc.
General Ledger
CHART OF ACCOUNTS
Old School Publishing Inc.
General Ledger
ASSETS
110 Cash
121 Accounts Receivable
125 Notes Receivable
126 Interest Receivable
131 Materials
132 Work in Process
133 Factory Overhead
134 Finished Goods
141 Supplies
142 Prepaid Insurance
143 Prepaid Expenses
181 Land
191 Factory
192 Accumulated Depreciation-Factory
LIABILITIES
210 Accounts Payable
221 Utilities Payable
231 Notes Payable
236 Interest Payable
241 Lease Payable
251 Wages Payable
252 Consultant Fees Payable
EQUITY
311 Common Stock
340 Retained Earnings
351 Dividends
390 Income Summary
REVENUE
410 Sales
610 Interest Revenue
EXPENSES
510 Cost of Goods Sold
520 Wages Expense
531 Selling Expenses
532 Insurance Expense
533 Utilities Expense
534 Office Supplies Expense
540 Administrative Expenses
560 Depreciation Expense-Factory
590 Miscellaneous Expense
710 Interest Expense
Journalize the Jan. 31 summary entries to record each of the following operations for January
(one entry for each operation). Refer to the Chart of Accounts for exact wording of account
titles.
a. Direct and indirect materials used.
b. Direct and indirect labor used.
c. Factory overhead applied to all four jobs (a single overhead rate is used based on direct
labor cost).
d. Completion of Jobs 301 and 302.
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JOURNAL
DATE
1
2
3
4
5
6
7
8
9
10
DESCRIPTION POST. REF.
DEBIT
CREDIT
Sweeties, Inc., manufactures a sugar product by a continuous process, involving three production
departments-Refining, Sifting, and Packing. Assume that records indicate that direct materials,
direct labor, and applied factory overhead for the first department, Refining, were $385,000,
$143,000, and $99,000, respectively. Also, work in process in the Refining Department at the
beginning of the period totaled $29,600, and work in process at the end of the period totaled
$29,800.
Required:
a.
b.
CHART OF ACCOUNTS
Sweeties, Inc.
General Ledger
ASSETS
110 Cash
121 Accounts Receivable
125 Notes Receivable
126 Interest Receivable
131 Materials
Work in Process141
Refining
Work in Process142
Sifting
Work in Process143
Packing
Factory Overhead151
Refining
Factory Overhead152
Sifting
Factory Overhead153
Packing
161 Finished Goods
171 Supplies
On September 30, journalize the entry to record the flow of
(1) costs into the Refining Department during the period for direct
materials.*
On September 30, journalize the entry to record the flow of
(2) costs into the Refining Department during the period for direct
labor.*
On September 30, journalize the entry to record the flow of
(3) costs into the Refining Department during the period for
factory overhead.*
On September 30, journalize the entry to record the transfer of
production costs to the second department, Sifting.*
*Refer to the Chart of Accounts for exact wording of account titles.
REVENUE
410 Sales
610 Interest Revenue
EXPENSES
510 Cost of Goods Sold
520 Wages Expense
531 Selling Expenses
532 Insurance Expense
533 Utilities Expense
534 Supplies Expense
540 Administrative Expenses
561 Depreciation Expense-Factory
590 Miscellaneous Expense
710 Interest Expen
172 Prepaid Insurance
173 Prepaid Expenses
181 Land
191 Factory
Accumulated
192
Depreciation-Factory
LIABILITIES
Accounts
210
Payable
221 Utilities Payable
231 Notes Payable
236 Interest Payable
251 Wages Payable
EQUITY
311 Common Stock
340 Retained Earnings
351 Dividends
390 Income Summary
a(1). On September 30, journalize the entry to record the flow of costs into the Refining
Department during the period for direct materials. Refer to the Chart of Accounts for exact
wording of account titles.
JOURNAL
DATE
DESCRIPTION POST. REF.
DEBIT
CREDIT
1
2
a(2). On September 30, journalize the entry to record the flow of costs into the Refining
Department during the period for direct labor. Refer to the Chart of Accounts for exact wording
of account titles.
JOURNAL
DATE
DESCRIPTION POST. REF.
DEBIT
CREDIT
1
2
a(3). On September 30, journalize the entry to record the flow of costs into the Refining
Department during the period for factory overhead. Refer to the Chart of Accounts for exact
wording of account titles
JOURNAL
DATE
DESCRIPTION POST. REF.
DEBIT
CREDIT
1
2
b. On September 30, journalize the entry to record the transfer of production costs to the second
department, Sifting. Refer to the Chart of Accounts for exact wording of account titles.
PAGE 10
JOURNAL
DATE
DESCRIPTION POST. REF.
DEBIT
CREDIT
1
2
Equivalent Units of Production
The Converting Department of Hopkinsville Company had 1,080 units in work in process at the
beginning of the period, which were 75% complete. During the period, 22,800 units were
completed and transferred to the Packing Department. There were 1,200 units in process at the
end of the period, which were 75% complete. Direct materials are placed into the process at the
beginning of production.
Determine the number of equivalent units of production with respect to direct materials and
conversion costs. If an amount is zero, enter in "0".
Hopkinsville Company
Number of Equivalent Units of Production
Whole Units
Inventory in process,
beginning
Started and completed
Transferred to Packing
Department
Inventory in process,
ending
Total
Direct Materials
Equivalent Units
Conversion Equivalent
Units
5.
Drawing Department
Direct Materials and Conversion Equivalent Units of Production
For November
Direct Materials
Whole Units
Equivalent Units
Inventory in process,
November 1
Started and completed in
November
Transferred to Winding
Department in November
Inventory in process,
November 30
Conversion
Equivalent Units
Total
6. b. If all direct materials are placed in process at the beginning of production, determine
the direct materials and conversion equivalent units of production for November for the
Winding Department. If an amount is zero, enter in "0".
Winding Department
Direct Materials and Conversion Equivalent Units of Production
For November
Direct Materials
Whole Units
Equivalent Units
Inventory in process,
November 1
Started and completed in
November
Transferred to finished
goods in November
Inventory in process,
November 30
Total
•
•
Conversion
Equivalent Units
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