Bob the Baker\'s Company has a monthly overhead cost formula of $42,900 + $6 per

Question

Bob the Baker's Company has a monthly overhead cost formula of $42,900 + $6 per direct labor hour. The firms expected annual capacity is 78,000 direct labor hours, to be incurred evenly over 12 months. Making one unit of the product requires 1.5 direct labor hours.

1. Prepare journal entries to record the application of overhead to WIP Inventory and the incurrence of $128,550 of actual overhead in June , when 6390 direct labor hours were worked.

I have that :Predetermined overhead = $42,900 + $39,000/6500 = $12.60 per unit
Actual overhead = $128,550 /6390 = $20.12 per unit
But I am not sure if this is correct and what to do next! Any help is greatly appreciated!
Thank you

Explanation / Answer

Expected Overhed for the year = $42,900 *12 months + $6 * 78,000DLH=$514,800+$468,000=$982,800 Predetermined overhead rate = $982,800/78,000DLH=$12.60 per DLH Predetermined Overhead per unit $12.60*1.5=$18.90 Manufacturing Overhead 128,550 Various Accounts 128,550 Work in Process Inventory (6390DLH * $12.6) 80,514 Manufacturing Overhead 80,514

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