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:

I need the overhead for 3A only

	Department
	Molding			Painting
Direct labor-hours		32,500			56,200
Machine-hours		89,000			36,000
Fixed manufacturing overhead cost	$	267,000		$	562,000
Variable manufacturing overhead per machine-hour	$	2.20			-
Variable manufacturing overhead per direct labor-hour		-		$	4.20

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
	Molding			Painting
Direct labor-hours		85			134
Machine-hours		300			72
Direct materials	$	936		$	1,200
Direct labor cost	$	720		$	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 37 units, what would be the unit product cost

What would be the total manufacturing cost recorded for Job 205? (Round "Predetermined overhead rate" to 2 decimal places. Round other intermediate calculations and final answers to the nearest dollar amount.)

3A
	Department Molding Painting Total Direct materials Direct labor Manufacturing overhead Total cost

Answer 1

1)	Predetermined overhead rates
	Molding
	= (fixed overhead cost / Number of machine-hours ) + Variable overhead cost per machine hours
	= ($267000/89000) +$2.20		3
	=$3+2.2
	=$5.2 per MH
	Painting
	= (fixed overhead cost / Number of labor hours ) + Variable overhead cost per labor hours
	=($562000/56200) +$4.2
	=$10+4.2
	=$14.2	per LH
2)	Total Manufacturing overhead cost applied to Job 205
	=(Machine hours in molding *$5.2 per MH) + (Labor hours in Painting *$14.2 per LH)
	=(300 hours *$5.2) + (134 hours *$14.2)
	=$3463
3a)	total manufacturing cost recorded for Job 205
		Department
		Molding	Painting
	Direct materials	$                      936	$            1,200
	Direct labor	$                      720	$            1,010
	Manufacturing overhead	$                   1,560	$            1,903
	Total cost	$                   3,216	$            4,113
3b)	If the job contained 50 units, what would be the unit product cost
	=total manufacturing cost/number of units
	=$7328.80/37
	=$198per unit
	=$118 per unit (rounded off)
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