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:

	Department
	Molding			Painting
Direct labor-hours		34,000			51,400
Machine-hours		90,000			40,000
Fixed manufacturing overhead cost	$	171,000		$	457,460
Variable manufacturing overhead per machine-hour	$	3.00			-
Variable manufacturing overhead per direct labor-hour		-		$	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:

	Department
	Molding			Painting
Direct labor-hours		87			133
Machine-hours		360			74
Direct materials	$	948		$	1,160
Direct labor cost	$	740		$	970

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 33 units, what would be the unit product cost?

Answer 1

1
Predetermined overhead rate:
Molding Department	4.90	per MH	=3+(171000/90000)
Painting Department	13.90	per DLH	=5+(457460/51400)
2
Overhead applied:
Molding Department	1764	=360*4.90
Painting Department	1849	=133*13.90
Total overhead cost	3613
3a
	Molding	Painting	Total
Direct materials	948	1160	2108
Direct labor	740	970	1710
Manufacturing Overhead	1764	1849	3613
Total cost	3452	3979	7431
3b
Total cost	7431
Divide by units	33
Unit product cost	225.18	per unit