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tsmith86 · Oct 19, 2005, 03:31 PM

Can someone please help me with the following problem. I am not really sure how I should go about solving it.
-The books of Peach Tree Products Company revealed that the following general journal entry had been made at the end of the current accounting period:
Factory Overhead... 2,000
Under- and Overapplied Factory Overhead... 2,000
Closed credit balance in factory overhead control account.
The total direct materials cost for the period was $40,000. The total direct labor cost, at an average rate of $10 per hour for direct labor, was one and one-half times the direct materials cost. Factory overhead was applied on the basis of $4 per direct labor hour. What was the total actual factory overhead incurred for the period? ( Hint: First solve for direct labor cost and then for direct labor hours).

SSchultz0956 · Oct 20, 2005, 11:54 AM

Again, I don't claim to be right every time, I am still in collegel and learning, but think of it this way:

TERMS:
Direct material costs = $40,000
Direct labor per hour = $10
Direct labor costs = 1.5 x Direct material costs
Overhead applied on basis of $4 per direct labor hour. (answer the steps)

1-Direct labor costs = 1.5 x 40,000 = ?
2-Direct labor hours = (Direct labor costs) / $10 = ?
3-Overhead = $4 x Labor hours = ?
Factory overhead are expenses incurred during production that are not direct materials nor direct labor.
Let me know if I was wrong and where I was wrong.