Booth Manufacturing uses a job order costing system that charges overhead to jobs on the basis of direct material cost. At year-end, the Work in Process Inventory account shows the following.DateExplanationDebitCreditBalanceDec. 31Direct materials cost980,000?980,00031Direct labor cost320,000?1,300,00031Overhead costs637,000?1,937,00031To finished goods?1,818,000119,000a. Determine the predetermined overhead rate used.b. Only one job remained in process at December 31. Its direct materials cost is $60,000. How much direct labor cost and overhead cost are assigned to it?
What will be an ideal response?
a. Rate = $637,000/$980,000 = 65%
| b. | Total cost of job in process | $119,000 | ? |
| ? | Less materials costs of job in process | 60,000 | $59,000 |
| ? | Less overhead applied ($60,000 ? .65) | ? | 39,000 |
| ? | Direct labor cost | ? | $20,000 |
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