Determine the predetermined overhead rate

Reference no: EM131017074

Deschamps Company's ending Goods in Process Inventory account consists of 5,000 units of partially completed product, and its Finished Goods Inventory account consists of 12,000 units of product. The factory manager determines that Goods in Process Inventory includes direct materials cost of $10 per unit and direct labor cost of $7 per unit. Finished goods are estimated to have $12 of direct materials cost per unit and $9 of direct labor cost per unit. The company established the predetermined overhead rate using the following predictions: estimated direct labor cost, $300,000, and estimated factory overhead, $375,000. The company allocates 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; and factory 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 or overapplied overhead).

Reference no: EM131017074

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