During the first quarter, Francum Company incurs the following direct labor costs: January $50,800, February $58,000, and March $65,200. For each month, prepare the entry to assign overhead to production using a predetermined rate of 73% of direct labor cost.

work in process inventory     37,084 debit

       manufactory overhead        37,084 credit

work in process inventory     42,340 debit

       manufactury overhead        42,340 credit

work in process inventory     47,596 debit

       manufactory overhead        47,596 credit

Explanation:

We calculate the applied overhead per month:

50800 x 73% =  37,084

58,000 x 73% = 42,340

65,200 x 73% = 47,596‬

the journal entry will be a debit to WIP and a credit to manufacturing overhead which latter will be compare with the actual overehad to solve for under or over-applied overhead.

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