Lorenzo Company applies overhead to jobs on the basis of direct materials cost. At year-end, the...

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Lorenzo Company applies overhead to jobs on the basis of direct materials cost. At year-end, the...

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 Inventory
Date		Explanation	Debit	Credit	Balance
Dec.	31	Direct materials cost	1,700,000		1,700,000
	31	Direct labor cost	250,000		1,950,000
	31	Overhead applied	782,000		2,732,000
	31	To finished goods		2,653,000	79,000

1. Determine the predetermined overhead rate used (based on direct materials cost).
2. Only one job remained in work in process inventory at December 31. Its direct materials cost is $26,000. How much direct labor cost and overhead cost are assigned to this job?

Only one job remained in work in process inventory at December 31. Its direct materials cost is $26,000. How much direct labor cost and overhead cost are assigned to this job?


Total cost of job in process


Direct labor cost

Determine the predetermined overhead rate used (based on direct materials cost).

Overhead Rate
Choose Numerator:	/	Choose Denominator:	=	Overhead Rate
	/		=	Overhead rate
	/

business accounting

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Answer 1

Answer #1

1
Overhead Rate
Choose Numerator:	/	Choose Denominator:	=	Overhead Rate
Overhead costs	/	Direct material costs	=	Overhead Rate
782000	/	1700000	=	46%

2
Total cost of job in process	79000
Less: Materials cost of job in process	26000
Less: Overhead applied	11960	=26000*46%
Direct labor cost	41040

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Answer 2

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