Question: The Ilarion Manufacturing Company operates a job-order costing system and applies overhead cost to jobs on the basis of direct labor cost. Its predetermined overhead rate was based on a cost formula that estimated $117,000 of manufacturing overhead for an estimated allocation base of $90,000 direct labor dollars. The company has provided the following data.
Inventories Beginning Ending
Raw materials $29,000 $ 11,000
Work in process $45,000 $ 36,000
Finished goods $71,000 $ 61,000