For 2008, Southwest Industrial has a monthly overhead cost formula of $42,900 + $6 per direct labor hour. The firm's 2008 expected annual capacity is 156,000 direct labor hours, to be incurred evenly each month. Making one unit of the company's product requres three direct labor hours. Determine the total overhead to be applied per unit of product in 2008. Prepare journal entries to record the application of overhead to Work in Process Inventory and the incurrence of $128.550 of actual overhead in January 2008, when 12,780 direct labor hours were worked. Given the actual direct labor hours in part (b), how many units would you have expected to be produced in January?

Question

For 2008, Southwest Industrial has a monthly overhead cost formula of $42,900 + $6 per direct labor hour.  The firm's 2008 expected annual capacity is 156,000 direct labor hours, to be incurred evenly each month.  Making one unit of the company's product requres three direct labor hours.  Determine the total overhead to be applied per unit of product in 2008.  Prepare journal entries to record the application of overhead to Work in Process Inventory and the incurrence of $128.550 of actual overhead in January 2008, when 12,780 direct labor hours were worked.  Given the actual direct labor hours in part (b), how many units would you have expected to be produced in January?