Chapter 19, Problem 17E

To determine

Predetermined overhead rate:

It is a standard rate at which the overhead cost is applied on the production. It is ascertained by dividing the total manufacturing overhead cost by the allocation base specified by the company.

Work in Process Inventor:

Work in Process Inventory contains the cost of direct materials, direct labors and overhead costs employed in the production. When the Job is completed, the cost of manufacturing the product is transferred to finished goods inventory account to make it ready for sales.

To determine:

1. Computation of predetermined overhead rate for 2017.

2. Determine the inventory’s direct materials costs assuming that the ending Work in Process Inventory account for 2017 is $71,000 with direct labor costs of $20,000.

3. Compute the inventory’s direct labor costs and its overhead costs assuming that the ending Finished Goods Inventory account is $490,000 with direct materials costs of $250,000.