1. Determine the predetermined overhead rate for year 2013.2. Set up a T-account for Factory Overhead and enter the overhead costs incurred and the amounts appliedto jobs during the year using the predetermined overhead rate.3. Determine whether overhead is overapplied or underapplied (and the amount) during the year.4. Prepare the adjusting entry to allocate any over- or underapplied overhead to Cost of Goods Sold.Check(3) $8,000 underappliedExercise 19-16Overhead rate calculation, allocation, and analysis P3Sunrise Company applies factory overhead based on direct labor costs. The company incurred the followingcosts during 2013: direct materials costs, $650,000; direct labor costs, $3,000,000; and factory overhead costsapplied, $1,800,000.1. Determine the company's predetermined overhead rate for year 2013.2. Assuming that the company's $71,000 ending Goods in Process Inventory account for year 2013 had$20,000 of direct labor costs, determine the inventory's direct materials costs.3. Assuming that the company's $490,000 ending Finished Goods Inventory account for year 2013 had$250,000 of direct materials costs, determine the inventory's direct labor costs and its overhead costs.
Exercise 19-17Costs allocated to ending inventories P1 P2 P3Deschamps Company's ending Goods in Process Inventory account consists of 5,000 units of partiallycompleted product, and its Finished Goods Inventory account consists of 12,000 units of product. The factorymanager determines that Goods in Process Inventory includes direct materials cost of $10 per unit and directlabor cost of $7 per unit. Finished goods are estimated to have $12 of direct materials cost per unit and $9 ofdirect labor cost per unit. The company established the predetermined overhead rate using the followingpredictions: estimated direct labor cost, $300,000, and estimated factory overhead, $375,000. The companyallocates factory overhead to its goods in process and finished goods inventories based on direct labor cost.During the period, the company incurred these costs: direct materials, $535,000; direct labor, $290,000; andfactory overhead applied, $362,500.1. Determine the predetermined overhead rate.2. Compute the total cost of the two ending inventories.3. Compute cost of goods sold for the year (assume no beginning inventories and no underapplied oroverapplied overhead).Check(3) Cost of goods sold, $671,750