Question
Lorenzo Company applies overhead to jobs on the basis of direct materials cost. At year-end, the Work in Process Inventory account shows the following. Work
Lorenzo Company applies overhead to jobs on the basis of direct materials cost. At year-end, the Work in Process Inventory account shows the following.
Work in Process InventoryDebitCreditBeginning0Direct materials used1,000,000Direct labor used270,000Overhead470,0001,666,000Cost of goods manufacturedEnding74,000
1.Determine the predetermined overhead rate used (based on direct materials cost).
2.Only one job remains in work in process inventory at year-end. Its direct materials cost is $31,000. How much direct labor cost and applied overhead are assigned to this job?
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