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 36,000 51,200 82,000 33.000 $164,000 $471.040 $ 2.80 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 79 180 Direct labor-hours Machine-hours Direct materials Direct labor cost $ 942 $1.000 $ 720 $ 960 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) Predetermine overhead rate

Molding department rate = (164000/82000)+2.80 = 4.80 per MH

Printing department rate = (471040/51200+4.80) = 14 per DLH

2) Total overhead cost = (340*4.8+130*14) = 3452

3) Total manufacturing cost

	Molding	Painting	Total
Direct material	942	1300	2242
Direct labor	720	960	1680
Manufacturing overhead	1632	1820	3452
Total Cost	3294	4080	7374

4) Unit product cost = 7374/33 = 223.45