Chapter 1, Problem 3.5EC

Lawrence Industries plans to produce 30,000 units next period at a denominator activity of 45,000 direct labor hours. The direct labor wage rate is $16.00 per hour. The company's standards allow 2.2 yards of direct materials for each unit of product; the material costs $8.50 per yard. The company's budget includes a variable manufacturing overhead cost of $3.25 per direct labor hour and fixed manufacturing overhead of $270,000 per period. Using 45,000 direct labor hours as the denominator activity, compute the predetermined overhead rate and break it down into variable and fixed elements.

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At Boston Industries, as of September 30, the company has net sales of $750,000 and a cost of goods available for sale of $620,000. Compute the estimated cost of the ending inventory, assuming the gross profit rate is 35%.

The inventory cost for each notebook related to the fixed production overhead is closest to?

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