For 2013, Omaha Mechanical has a monthly overhead cost formula of $42,900 þ $6 per direct labor hour. The firm's 2013 expected annual capacity is 78,000 direct labor hours, to be incurred evenly each month. Making one unit of the company's product requires 1.5 direct labor hours.
a. Determine the total overhead to be applied per unit of product in 2013.
b. 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 2013, when 6,390 direct labor hours were worked.
c. Given the actual direct labor hours in (b), how many units would you have expected to be produced in January?