Tasty Bakery applies overhead based on direct labor costs. The company reports the following costs for the year: direct materials, $650,000; direct labor, $3,000,000; and overhead applied, $1,800,000.

 Tasty Bakery applies overhead based on direct labor costs. The company reports the following costs for the year: direct materials, $650,000; direct labor, $3,000,000; and overhead applied, $1,800,000.


1. Determine the company’s predetermined overhead rate for the year.

2. The ending balance of its Work in Process Inventory account was $71,000, which included $20,000 of direct labor costs. Determine the direct materials costs in ending Work in Process Inventory.

 

Explanation
2.
Factory overhead in WIP Inventory ($20,000 × 60%) = $12,000

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