Lavender Corporation uses a job-order costing system and applies manufacturing overhead usinga predetermined overhead rate based on direct laborhours. The following data are availiable for August:
Inventory Begining Ending
Raw Material(all direct material $28,000 $32,000
Work in process $ 600 $15,000
Finished Goods $35,000 $23,000
Actual Cost for August:
Raw material purchase $51,000
Direct labor salaries paid $90,000
Direct labor pay rate er hour $ 15
Manufacturing overhead incurred $49,000
Information from Lavender's budget:
Manufacturing overhead budgeted per month $60,000
Direct labor hours budgeted per month 7500
Q1. Compute the predetermined overhead rate
Q2. For the same company above, compute the manufacturing cost for August: