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: Molding Painting 37,500 Direct labor-hours Machine-hours Fixed manufacturing overhead coat Variable manufacturing overhead per machine-hour Variable manufacturing overhead per direct labor-hour 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 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 2057 3.b. If the job contained 32 units, what would be the unit product cost? Complete this question by entering your an RAH Prev 1 Next > MacBook Pro ARHIV

required 1-3b

Answer 1

Answer -

1. Answer -

Predetermined overhead rate
Molding department	$5.50 per machine-hour
Painting department	$13.50 per direct labor-hour

Calculation:

Molding department:

Estimated total manufacturing overhead cost in the Molding Department:

= Fixed manufacturing overhead cost + [Variable manufacturing overhead per machine-hour * Machine-hours in molding department]

= $254200 + [$2.40 per machine-hour * 82000 machine-hours]

Estimated total manufacturing overhead cost = $451000

So,

Predetermined overhead rate = Estimated total manufacturing overhead cost / Estimated total machine-hours

= $451000 / 82000 machine-hours

Predetermined overhead rate = $5.50 per machine-hour

Painting department:

Estimated total manufacturing overhead cost in the Painting department:

= Fixed manufacturing overhead cost + [Variable manufacturing overhead per direct labor-hour * Direct labor-hours in painting department]

= $495040 + [$4.40 per direct labor-hour * 54400 direct labor-hours]

Estimated total manufacturing overhead cost = $734400

So,

Predetermined overhead rate = Estimated total manufacturing overhead cost / Estimated total direct labor-hours

= $734400 / 54400 direct labor-hours

Predetermined overhead rate = $13.50 per direct labor-hour

2. Answer -

Total overhead cost = $3514

Calculation:

Molding department overhead applied:

= [310 machine-hours * Predetermined overhead rate]

= [310 machine-hours * $5.50 per machine-hour]

= $1705

Painting department overhead applied:

= [134 direct labor-hours * Predetermined overhead rate]

= [134 direct labor-hours * $13.50 per direct labor-hour]

= $1809

Therefore,

Total overhead cost = Molding department overhead applied + Painting department overhead applied

Total overhead cost = $1705 + $1809

Total overhead cost = $3514

3-a. Answer -

	Department
	Molding	Painting	Total
Direct materials	$942	$1120	$2062
Direct labor cost	$710	$1010	$1720
Manufacturing overhead (overhead applied)	$1705	$1809	$3514
Total cost	$3357	$3939	$7296

3-b. Answer -

Unit product cost = $228 per unit

Calculation:

Product cost per unit = Total product cost / 32 units

Product cost per unit = $7296 / 32 units

Product cost per unit = $228 per unit