Chapter 19, Problem 17E

Exercise 19-17 Overhead rate calculation, allocation, and analysis P3

Moonrise Bakery applies factory overhead based on direct labor costs. The company incurred the following costs during the year: direct materials costs, $650,000: direct labor costs, $3,000,000: and factory overhead costs applied, $1,800,000.
1. Determine the company's predetermined overhead rate for the year.
2. Assuming that the company's $71.000 ending Work in Process Inventory account for the year had $20.000 of direct labor costs, determine the inventory's direct materials costs.