PROBLEM #1 - EVERGREEN COMPANY
FIRST METHOD
The two methods of recording the overtime premium is to charge it to the factory
overhead control or charge it to the job. Charging it to factory overhead control
happens when the cause of overtime is due to random scheduling, it will be
allocated to the factory overhead of it will be allocated to the factory overhead of
the jobs using the rates of the company; it will increase all of the factory overhead
cost of all jobs. While charging to the job happens when the overtime is due to a
specific job, the specific job will handle the charges for the overtime by itself; it will
only affect the factory overhead control cost of the specific job.
2. Compute for total costs
FIRST METHOD - CHARGED TO SPECIFIC JOB
JOB 401 JOB 402
DM 28,000 37,000
DL 18000 23,000
FOH 5600 11200
OVERTIME PREM. 6000
TOTAL COSTS 51,600 77,200
SECOND METHOD - CHARGED TO FOH
JOB 401 JOB 402
DM 28,000 37,000
DL 18000 23,000
FOH 7600 15200
TOTAL COSTS 53,600 75,200
PROBLEM #2
, EMPLOYEES Austria Bautista De Santos Motus Reyes
Direct Labor 1440 1440 1800
Direct Labor 72 108 180
FOH (Overtime Prem.) 36 54 90
FOH (Indirect Labor) 1200 1200
Total earnings 1548 1602 2070 1200 1200
1. Recording the payroll
Payroll 7620
Accrued Payroll 7620
2. Payment of the payroll
Accrued Payroll 7620
Cash 7620
3. Distribution of the payroll
Work In Process 5040
Factory Overhead Control 2580
Payroll 7620
PROBLEM #3 - NORMAN COMPANY
FIRST METHOD
The two methods of recording the overtime premium is to charge it to the factory
overhead control or charge it to the job. Charging it to factory overhead control
happens when the cause of overtime is due to random scheduling, it will be
allocated to the factory overhead of it will be allocated to the factory overhead of
the jobs using the rates of the company; it will increase all of the factory overhead
cost of all jobs. While charging to the job happens when the overtime is due to a
specific job, the specific job will handle the charges for the overtime by itself; it will
only affect the factory overhead control cost of the specific job.
2. Compute for total costs
FIRST METHOD - CHARGED TO SPECIFIC JOB
JOB 401 JOB 402
DM 28,000 37,000
DL 18000 23,000
FOH 5600 11200
OVERTIME PREM. 6000
TOTAL COSTS 51,600 77,200
SECOND METHOD - CHARGED TO FOH
JOB 401 JOB 402
DM 28,000 37,000
DL 18000 23,000
FOH 7600 15200
TOTAL COSTS 53,600 75,200
PROBLEM #2
, EMPLOYEES Austria Bautista De Santos Motus Reyes
Direct Labor 1440 1440 1800
Direct Labor 72 108 180
FOH (Overtime Prem.) 36 54 90
FOH (Indirect Labor) 1200 1200
Total earnings 1548 1602 2070 1200 1200
1. Recording the payroll
Payroll 7620
Accrued Payroll 7620
2. Payment of the payroll
Accrued Payroll 7620
Cash 7620
3. Distribution of the payroll
Work In Process 5040
Factory Overhead Control 2580
Payroll 7620
PROBLEM #3 - NORMAN COMPANY
