1. Reformer Company estimates that 64,000 direct labor hours will be worked and 80,000 machine hours will be incurred during the year. In addition, the company has developed the following cost estimates for next year:

Sales commissions $600,000 Direct labor 440,000 Salary of production supervisor 280,000 Rent on factory equipment 128,000 Direct materials 120,000 Advertising expense 88,000 Indirect materials 40,000

If overhead is applied on the basis of direct labor hours, what is the companys predetermined overhead rate?

2. Sunstead Company uses a job-order costing system and applies manufacturing overhead to Work in Process inventory using a predetermined overhead rate. The company had no beginning or ending inventories in the current month. During the month, the companys transactions included the following:

Manufacturing overhead cost incurred $1,000,000 Manufacturing overhead cost applied 904,000 Direct labor cost incurred 856,000 Direct materials issued to production 720,000 Indirect materials issued to production 64,000

Part (a) What was the cost of goods manufactured?

Part (b) What was the amount of cost of goods sold?