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.

 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
Debit    Credit
Beginning    0         
Direct materials used    1,500,000         
Direct labor used    300,000         
Overhead    600,000         
          2,350,000    Cost of goods manufactured
Ending    50,000         
   
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 $30,000. How much direct labor cost and applied overhead are assigned to this job?

 

Explanation
2.
Less: overhead applied ($30,000 × 40%) = ($12,000)

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