Graphic Designs operates a job-order costing system and applies overhead to jobs on the basis of direct materials used in production. Its predetermined overhead was based on a cost formula that estimated $900,000 of manufacturing overhead for an estimated allocation base of $600,000 direct material dollars to be used in production. The company has provided the following data for the just completed year:

Purchase of raw materials	$530,000
Direct labour cost	$90,000
Manufacturing overhead costs:
Indirect labour	$160,000
Property taxes	$48,000
Depreciation of equipment	$250,000
Maintenance	$95,000
Insurance	$7,000
Rent, building	$170,000

	Beginning	Ending
Raw Materials	$30,000	$60,000
Work in Process	$150,000	$70,000
Finished Goods	$260,000	$400,000

Required:

1. Calculate the predetermined overhead rate for the year. (1 mark)
2. Calculate the direct materials used in production. Assume all raw materials are used in production as direct materials. (1 mark)
3. Calculate the amount of underapplied or overapplied overhead for the year. Specify whether the amount is underapplied or overapplied overhead. (1 mark)
4. What options are available for disposing of underapplied or overapplied overhead? (1 mark)
5. Assume that the $70,000 ending balance in Work in Process includes $24,000 of direct materials. Given this assumption, determine the direct labour cost missing below. (1 mark)

Direct materials	$24,000
Direct labour	?
Manufacturing overhead	?
Work in process inventory	$70,000