Exercise 15-12 Analysis of costs assigned to work in process LO P3 Lorenzo Company uses a job order costing system that charges overhead to jobs on the basis of direct materials cost. At year-end, the Work in Process Inventory account shows the following. Date Explanation Debit Credit Balance 2017 Dec. 31 Direct materials cost 1,500,000 1,500,000 31 Direct labor cost 300,000 1,800,000 31 Overhead applied 600,000 2,400,000 31 To finished goods 2,350,000 50,000 1. Determine the predetermined overhead rate used (based on direct materials cost). 2. Only one job remained in work in process inventory at December 31, 2017. Its direct materials cost is $30,000. How much direct labor cost and overhead cost are assigned to this job

Suppose you win a small lottery and have the choice of two ways to be paid: you can accept the money in a lump sum or in a series of payments over time. if you pick the lump sum, you get $2,950 today. if you pick payments over time, you get three payments: $1,000 today, $1,000 1 year from today, and $1,000 2 years from today. 1) at an interest rate of 6% per year, the winner would be better off accepting the (lump sum / payments over time), since it has the greater present value. 2) at an interest rate of 9% per year, the winner would be better off accepting the (lump sum / payments over time), since it has the greater present value. 3) years after you win the lottery, a friend in another country calls to ask your advice. by wild coincidence, she has just won another lottery with the same payout schemes. she must make a quick decision about whether to collect her money under the lump sum or the payments over time. what is the best advice to give your friend? a) the lump sum is always better. b) the payments over time are always better. c) it will depend on the interest rate; advise her to get a calculator. d) none of these answers is good advice.