Chapter 2, Problem 16E

Moonrise Bakery applies factory overhead based on direct labor costs. The company incurred the following costs during 2015: direct materials costs, $650,000; direct labor costs, $3,000,000 and factory over-head costs applied, S1,800,000.

1. Determine the company’s predetermined overhead rate for 2015.
2. Assuming that the company’s $71,000 ending Work in Process Inventory accountant for 2015 had $20,000 of direct labor costs, determine the inventory’s direct materials costs.
3. Assuming that the company’s ending Finished Goods Inventory account for 2015 had $250,000 of direct materials costs, determine the inventory’s direct labor costs and its overhead costs.