Question

Problem 2-19 Multiple Predetermined Overhead Rates; Applying Overhead [LO2-1, LO2-2, LO2-4] 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 Department Molding Painting 50,800 36,000 $224,000 $472,440 38,500 80,000 Direct labor-hours Machine-hours Fixed manufacturing overhead cost Variable manufacturing overhead per machine-hour Variable manufacturing overhead per direct labor-hour $2.60 -$4.60 Job 205 was started on August 1 and completed on August 10. The company's cost records show the following information concerning the job Department MoldingPainting Direct labor-hours Machine-hours Direct materials Direct labor cost 130 67 ş 938 $1,240 $ 740 970 82 360 Required 1. Compute the predetermined overhead rates used in the Molding Department and the Painting Department. 2. Compute the total overhead cost applied to Job 205 3-a. What would be the total manufacturing cost recorded for Job 205? 3-b. If the job contained 37 units, what would be the unit product cost?

Answer 1

Requirement 1:

Predetermined Overhead Rate
Molding Department	$ 5.40	per MH
Painting Department	$ 13.90	per DLH

POHR for Molding Department : $ 224,000 / 80,000 MH + $ 2.60 per MH = $ 5.40 per MH

POHR for Painting Department : $ 472,440 / 50,800 DLH + $ 4.60 per DLH = $ 13.90 per DLH

Requirement 2:

Total Overhead Cost

$ 3,751

Total overhead cost assigned to Job 205:

Molding: 360 MH x $ 5.40 = $ 1,944

Painting: 130 DLH x $ 13.90 = $ 1,807

Total overhead cost = $ 1,944 + $ 1,807 = $ 3,751

Requirement 3A:

	Molding	Painting	Total
Direct Materials	$ 938	$ 1,240	$ 2,178
Direct Labor	740	970	1,710
Manufacturing Overhead	1,944	1,807	3,751
Total Cost	$ 3,622	$ 4,017	$ 7,639

Requirement 3B:

Unit Product Cost

$ 206.46