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 34,500 59.100 85,000 30,899 $187,000 $567,368 $ 2.80 - $ 4.89 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 78 127 380 Direct labor-hours Machine-hours Direct materials Direct labor cost $942 $200 $1,168 $1,010 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 34 units, what would be the unit product cost? Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3A Req 38 Compute the total overhead cost applied to Job 205. (Round "Predetermined overhead rate" to 2 decimal places. Round other intermediate calculations and final answers to the nearest dollar amount.) Total overhead cost Reg1 Req 3A >

Answer 1

1

Predetermined overhead rate in Molding department = Fixed overhead rate + variable overhead rate

= fixed overhead/ machine hours + variable overhead rate = $187,000/ 85,000 + $2.80 = $5 per machine hour.

Predetermined overhead rate in painting department = Fixed overhead rate + variable overhead rate

= fixed overhead/ labor hours + variable overhead rate = $567,360/ 59,100 + $4.80 = $14.4 per labor hour.

2

Overhead cost applied to Job 205 = Machine hours used × $5 per hour + Labor hours used × $14.4 per hour = 380 ×$5 + 127×$14.40 = $3,729

3-a

Total manufacturing cost:

	Molding	Painting	Total
Overhead	$    1,900	$    1,829	$    3,729
Material	$       942	$    1,160	$    2,102
labor	$       700	$    1,010	$    1,710
Total	$    3,542	$    3,999	$    7,541

Total manufacturing cost = $7,541

3-b

Overhead cost per unit = $3,729/34 =$110 per unit.

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