Question

High Desert Potteryworks makes a variety of pottery products that it sells to retailers, such as Home Depot. The company uses a job-order costing system in which predetermined overhead rates are used to apply manufacturing overhead cost to jobs. The predetermined overhead rate in the Moulding Department is based on machine-hours, and the rate in the Painting Department is based on direct labour cost. At the beginning of the year, the company's management made the following estimates: Department Direct labour-hours Machine-hours Direct materials cost Direct labour cost Manufacturing overhead cost Moulding 15,250 83,000 $523,000 $152,500 $821,700 Painting 66,500 9,300 $663,000 $465,500 $791,350 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 Direct labour-hours Machine-hours Materials placed into production Direct labour cost Moulding Painting 35 110 120 25 $490 $352 $310 $700 Required: Compute the predetermined overhead rate used during the year in the Moulding Department. Compute the rate used in the Painting Department. (Round "Cost per machine-hour" answer to 2 decimal places.) Predetermined Overhead Rate 9.90 per machine-hour Moulding Department Painting Department ... % of direct labour cost

How Do i find the % of direct labour cost?

Answer 1

Answer

• Requirement 1

>Molding Department:
--Molding Department predetermined overhead rate is based on Machine hours.
--Hence, predetermined overhead rate = Estimated overhead / Estimated machine hours
= $ 821700 / 83000 machine hours
= $ 9.90 per machine hours.

>Painting Department:
--Painting Department predetermined overhead rate is based on ‘direct labor cost’.
..Hence, predetermined overhead rate = (Estimated Overhead / Estimated direct labor cost in $) x 100
= ($791350 / $ 465500) x 100
= 170% of direct labor cost