Padres Company had the following information: $$\begin{array} { l r }
\text { Budgeted factory overhead } & \$ 78,000 \
\text { Actual factory overhead } & \$ 80,000 \
\text { Budgeted: Production setups } & 12,000 \
\text { Actual: Production setups } & 12,500
\end{array}$$ The journal entry to apply overhead to a job requiring 4,500 setups includes a _____.
A)debit to Factory Overhead Control for $31,296
B)credit to Factory Overhead Control for $29,250
C)debit to WIP Inventory for $31,296
D)credit to Cost of Goods Sold for $29,250

Question

Padres Company had the following information: $$\begin{array} { l r } 
\text { Budgeted factory overhead } & \$ 78,000 \
\text { Actual factory overhead } & \$ 80,000 \
\text { Budgeted: Production setups } & 12,000 \
\text { Actual: Production setups } & 12,500
\end{array}$$ The journal entry to apply overhead to a job requiring 4,500 setups includes a _____.
A)debit to Factory Overhead Control for $31,296
B)credit to Factory Overhead Control for $29,250
C)debit to WIP Inventory for $31,296
D)credit to Cost of Goods Sold for $29,250

Quizplus · Accepted Answer

The overhead rate is calculated as budgeted overhead divided by budgeted setups ($78,000 / 12,000 = $6.50 per setup). For 4,500 setups, the applied overhead is 4,500 x $6.50 = $29,250. The journal entry would credit Factory Overhead Control for $29,250.

Padres Company Had the Following Information The Journal Entry to Apply Overhead to a Job Requiring