White Company has two departments, Cutting and Finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each department. The Cutting Department bases its rate on machine-hours, and the Finishing Department bases its rate on direct labor-hours. At the beginning of the year, the company made the following estimates:
Department | ||||
Cutting | Finishing | |||
Direct labor-hours | 6,600 | 78,000 | ||
Machine-hours | 68,300 | 2,400 | ||
Total fixed manufacturing overhead cost | $ | 360,000 | $ | 588,000 |
Variable manufacturing overhead per machine-hour | $ | 4.00 | — | |
Variable manufacturing overhead per direct labor-hour | — | $ | 4.75 | |
Required:
1. Compute the predetermined overhead rate for each department.
2. The job cost sheet for Job 203, which was started and completed during the year, showed the following:
Department | ||||||||
Cutting | Finishing | |||||||
Direct labor-hours | 4 | 18 | ||||||
Machine-hours | 88 | 4 | ||||||
Direct materials | $ | 760 | $ | 360 | ||||
Direct labor cost | $ | 100 | $ | 450 | ||||
Using the predetermined overhead rates that you computed in requirement (1), compute the total manufacturing cost assigned to Job 203.
3. Would you expect substantially different amounts of overhead cost to be assigned to some jobs if the company used a plantwide predetermined overhead rate based on direct labor-hours, rather than using departmental rates?
1) Cutting overhead rate = 360000/68300+4 = 9.27 per MH
Finishing overhead rate = 588000/78000+4.75 = 12.29 per DLH
2) Total manufacturing cost
Cutting | Finishing | Total | |
Direct material | 760 | 360 | 1120 |
Direct labor | 100 | 450 | 550 |
Overhead | 88*9.27 = 815.76 | 18*12.29 = 221.22 | 1036.98 |
Total | 1676 | 1031 | 2707 |
3) Yes
White Company has two departments, Cutting and Finishing. The company uses a job-order costing system and...
White Company has two departments, Cutting and Finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each department. The Cutting Department bases its rate on machine-hours, and the Finishing Department bases its rate on direct labor-hours. At the beginning of the year, the company made the following estimates: Department Cutting Finishing Direct labor-hours 6,600 65,000 Machine-hours 57,300 3,200 Total fixed manufacturing overhead cost $ 390,000 $ 443,000 Variable manufacturing overhead per machine-hour $ 3.00...
White Company has two departments, Cutting and Finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each department. The Cutting Department bases its rate on machine-hours, and the Finishing Department bases its rate on direct labor-hours. At the beginning of the year, the company made the following estimates: Department Cutting Finishing Direct labor-hours 8,100 81,000 Machine-hours 59,900 2,900 Total fixed manufacturing overhead cost $ 380,000 $ 583,000 Variable manufacturing overhead per machine-hour $ 4.00...
White Company has two departments, Cutting and Finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each department. The Cutting Department bases its rate on machine-hours, and the Finishing Department bases its rate on direct labor-hours. At the beginning of the year, the company made the following estimates: Direct labor-hours Machine-hours Total fixed manufacturing overhead cost Variable manufacturing overhead per machine-hour Variable manufacturing overhead per direct labor-hour Department Cutting Finishing 8.900 36.000 60,900 3,600...
White Company has two departments, Cutting and Finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each department. The Cutting Department bases its rate on machine hours, and the Finishing Department bases its rate on direct labor-hours. At the beginning of the year, the company made the following estimates: Direct labor-hours Machine-hours Total fixed manufacturing overhead cost Variable manufacturing overhead per machine-hour Variable manufacturing overhead per direct labor-hour Department Cutting Finishing 6,900 73,000 56,400...
White Company has two departments, Cutting and Finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each department. The Cutting Department bases its rate on machine-hours, and the Finishing Department bases its rate on direct labor-hours. At the beginning of the year, the company made the following estimates: Direct labor-hours Machine-hours Total fixed manufacturing overhead cost Variable manufacturing overhead per machine-hour Variable manufacturing overhead per direct labor-hour Department Cutting Finishing 6,600 62,000 60,900 3,200...
White Company has two departments, Cutting and Finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each department. The Cutting Department bases its rate on machine-hours, and the Finishing Department bases its rate on direct labor-hours. At the beginning of the year, the company made the following estimates: Department Cutting Finishing Direct labor-hours 6,700 87,000 Machine-hours 67,200 3,100 Total fixed manufacturing overhead cost $ 390,000 $ 490,000 Variable manufacturing overhead per machine-hour $ 3.00...
White Company has two departments, Cutting and Finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each department. The Cutting Department bases its rate on machine-hours, and the Finishing Department bases its rate on direct labor hours. At the beginning of the year, the company made the following estimates: Department Cutting Finishing Direct labor-hours 7,500 67,899 Machine-hours 66,000 3,100 Total fixed manufacturing overhead cost $400,000 $555,000 Variable manufacturing overhead per nachine-hour $ 2.00 -...
White Company has two departments, Cutting and Finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each department. The Cutting Department bases its rate on machine-hours, and the Finishing Department bases its rate on direct labor-hours. At the beginning of the year, the company made the following estimates: Direct labor-hours Machine-hours Total fixed manufacturing overhead cost Variable manufacturing overhead per machine-hour Variable manufacturing overhead per direct labor-hour Department Cutting Finishing 7,800 64,000 68,300 3,600...
White Company has two departments, Cutting and Finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each department. The Cutting Department bases its rate on machine-hours, and the Finishing Department bases its rate on direct labor-hours. At the beginning of the year, the company made the following estimates: Direct labor-hours Machine-hours Total fixed manufacturing overhead cost Variable manufacturing overhead per machine-hour Variable manufacturing overhead per direct labor-hour Department Cutting Finishing 7,800 68,000 66,700 3,600...
White Company has two departments, Cutting and Finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each department. The Cutting Department bases its rate on machine-hours, and the Finishing Department bases its rate on direct labor-hours. At the beginning of the year, the company made the following estimates: Direct labor-hours Machine-hours al fixed manufacturing overhead cost Variable manufacturing overhead per machine-hour Variable manufacturing overhead per direct labor-hour Department Cutting Finishing 8,100 67,000 53,500 3,300...