Question

High Desert Potteryworks makes a variety of pottery products that it sells to retailers. The company uses a job-order costing system in which departmental predetermined overhead rates are used to apply manufacturing overhead cost to jobs. The predetermined overhead rate in the Molding Department is based on machine-hours, and the rate in the Painting Department is based on direct labor- hours. At the beginning of the year, the company provided the following estimates: Direct labor-hours Machine-hours Fixed manufacturing overhead cost Variable manufacturing overhead per machine-hour Variable manufacturing overhead per direct labor-hour Department Molding Painting 30,500 55,400 85,000 35,000 $229,500 $481,980 $ 3.00 - - $ 5.00 Job 205 was started on August 1 and completed on August 10. The company's cost records show the following information concerning the job: Direct labor-hours Machine-hours Direct materials Direct labor cost Department MoldingPainting 85 129 320 67 $ 938 $1,280 $ 700 $ 990 Required: 1. Compute the predetermined overhead rates used in the Molding Department and the Painting Department. 12. Compute the total overhead cost applied to Job 205...

Answer 1

Predetermined overhead rates for Variable overheads were given in question.

for the fixed overheads, it is computed as follows:

1 Predetermined Overhead rates in Molding and Painting department Particulars Fixed Manufacturing OH Direct labour hrs DLH Machine hrs MH Over head rate unit Molding Painting $2,29,500 $4,81,980 55400 85000 S2.70 s8.70 per MH per DLH

2 Overhead Cost applied to Job 25 Department Molding Department Painting Department Rate - Variable Manufacturing OH 3 per MH 5 per DLH Rate - Fixed Manufacturing OH 2.7 per MH 8.7 per DLH Rate - Manufacturing OH 5.7 per MH 13.7 per DLH Basis Machine hrs MH Direct labour hrs DLH Machine hrs MH 320 Direct labour hrs DLH 129 Overhead Cost $1,824.00 S1,768.00 (Rounded up) (Rate x basis) Overhead Cost applied to Job 25 $3,592.00

Total 3 a. Total Manufacturing Cost b. Manufacturing Cost per unit Department Particulars Molding Painting Direct Materials $938 $1,280 Direct Labour $700 $990 Manufacturing Overhead $1.824 $1,768 Total Cost $3.462 $4,038 No of Units produced Manufacturing Cost per Unit $2.218 $1,690 $3,592 $7,500 S300