Computing overhead rate and direct materials

P3

Tasty Bakery applies overhead based on direct labor costs. The company reports the following costs for the year: direct materials, $650,000; direct labor, $3,000,000; and overhead applied, $1,800,000.

1. Determine the companys predetermined overhead rate for the year.

2. The ending balance of its Work in Process Inventory account was $71,000, which included $20,000 of direct labor costs. Determine the direct materials costs in ending Work in Process Inventory.