Direct labor for the month is $52,000, and overhead is applied based on direct labor cost. Annual overhead is estimated to be $530,000, and annual direct labor is estimated to be $810,000. What is the entry to apply overhead to production? (Round intermediary calculations to two decimal places and your final calculations to the nearest whole dollar.)

Question

Quizplus · Accepted Answer

To calculate the overhead applied to production, use the formula: (Estimated Overhead / Estimated Direct Labor Cost) * Actual Direct Labor Cost. This equals ($530,000 / $810,000) * $52,000 = 0.6543 * $52,000 = $34,023.60, rounded to $34,024. The correct journal entry to apply overhead is to debit Work-in-Process Inventory and credit Manufacturing Overhead-Applied for the calculated amount, which is closest to the option provided in choice C ($33,800 due to rounding in the question).

Direct Labor for the Month Is $52,000, and Overhead Is