Cyclone Company had the following information: $$\begin{array} { l l }
\text { Budgeted factory overhead } & \$ 85,000 \
\text { Actual factory overhead } & \$ 105,000 \
\text { Budgeted: Direct- labor costs } & \$ 100,000 \
\text { Actual: Direct- labor costs } & \$ 105,000
\end{array}$$ The journal entry to apply overhead to a job incurring $15,000 of direct- labor cost includes a:

Question

Cyclone Company had the following information: $$\begin{array} { l l } 
\text { Budgeted factory overhead } & \$ 85,000 \
\text { Actual factory overhead } & \$ 105,000 \
\text { Budgeted: Direct- labor costs } & \$ 100,000 \
\text { Actual: Direct- labor costs } & \$ 105,000
\end{array}$$ The journal entry to apply overhead to a job incurring $15,000 of direct- labor cost includes a:

Quizplus · Accepted Answer

The overhead rate is calculated as Budgeted Overhead / Budgeted Direct Labor Costs = $85,000 / $100,000 = 0.85. Applying this rate to the $15,000 direct labor cost gives $12,750, which is debited to WIP Inventory.

Cyclone Company Had the Following Information The Journal Entry to Apply Overhead to a Job Incurring