Question

Req 1 to 5 Req 6 Req 7 Req 8 If overhead is applied to production on the basis of direct labor cost, what predetermined overhead rate was in effect during the year? The predetermined overhead rate was % of direct labor cost < Req 1 to 5 Req7 >

Answer 1

1)	Cost of Raw Materials		=	$ 15000 + $ 120000 - $ 25000			(i.e., Opening Bal + Purchases - Closing Bal.)
			=	$ 110,000.00
2)	Indirect materials		=	$ 110000 - $ 90000			(i.e., Cost of Raw Materials - Direct Materials)
			=	$   20,000.00
3)	Indirect Labor cost		=	$ 185000 - $ 150000			(i.e., Total Labor cost - Direct Labor Cost)
			=	$   35,000.00
4)	Cost of Goods Manu		=	$ 470,000.00
5)	Unadjusted COGS		=	$ 40000 + $ 470000 - $ 60000			(i.e., Beginning F.G inv + Cost of Goods Manu. - Ending F.G inv)
			=	$ 450,000.00
6)	Predetermined OH rate		=	$ 240000 / $ 150000			(i.e., OH applied / Direct Labor cost)
			=	$             1.60
7)	Actual OH incurred		=	$ 230,000.00
	Applied OH		=	$ 240,000.00
	Overapplied OH		=	$   10,000.00

8)		WIP
		Bal 1/1	$   20,000.00	Credits	$ 470,000.00
		D.M	$   90,000.00
		D.L	$ 150,000.00
		OH	$ 240,000.00
		Bal 12/31	$   30,000.00
		If Direct Labor Cost is $ 8000
		Applied OH cost would be $ 8000 x 1.6				$ 12,800.00
		Direct Material Cost				$   9,200.00
		($ 30000 - $ 12800 - $ 8000)

Is this okay?