19-6 connect

Lorenzo Company uses a job order cost accounting system that charges overhead to jobs on the basis of direct material cost. At year-end, the Goods in Process Inventory account shows the following.

Date Explanation Debit Credit Balance 2013

Dec. 31 Direct materials cost 1,500,000 1,500,000 31 Direct labor cost 300,000 1,800,000 31 Overhead costs 600,000 2,400,000 31 To finished goods 2,350,000 50,000

1. Determine the overhead rate used (based on direct material cost). Overhead Rate

Choose Numerator: / Choose Denominator: = Overhead Rate / = Overhead rate

= Overhead costs Accounts receivable Average raw materials inventory Cost of goods sold Direct material costs Net sales Raw materials used

2. Only one job remained in the goods in process inventory at December 31, 2013. Its direct materials cost is $30,000. How much direct labor cost and overhead cost are assigned to it?

Total cost of job in process

Direct labor cost

Hint #1

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