Question

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 8,000 71,000 69,000 2,500 $ 390,000 $ 410,000 $ 4.00 - - $ 3.75 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 Machine-hours Direct materials Direct labor cost 83 $ 730 $ 80 $ 390 $ 320 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?

Answer 1

My humble request to you please don't post multiple question under one post.As per HomeworkLib policy I will answer Question 1.

1)
Cutting
Total manufacturing overhead cost in the Cutting Department = $390,000 + $ ($4.00 per MH)(69,000 MH)
Estimated fixed manufacturing overhead	$ 390,000.00
Estimated variable manufacturing overhead $4.00 per MH × 69,000 MHs	$ 276,000.00
Estimated total manufacturing overhead cost	$ 666,000.00
Predetermined overhead rate = Estimated total manufacturing overhead ÷ Estimated total machine-hours
Predetermined overhead rate = $666,000/69000	$            9.65	Per Machine Hour
Finishing
Total manufacturing overhead cost in the Finishing Department = $410,000 + $ ($3.75 per DL)(71,000 DL)
Estimated fixed manufacturing overhead	$ 410,000.00
Estimated variable manufacturing overhead $3.75 per MH × 71,000 MHs	$ 266,250.00
Estimated total manufacturing overhead cost	$ 676,250.00
Predetermined overhead rate = Estimated total manufacturing overhead ÷ Estimated total machine-hours
Predetermined overhead rate = $676,250/ 71000)	$            9.52	Per direct labour Hour
2)			Job 203
	Cutting	Finishing	Total
Direct Materials	$        730.00	$     390.00	$  1,120.00
Direct Labour	$          80.00	$     320.00	$     400.00
Overhead (9.65 x 83MH) ; ($9.52 x 16 DLH)	$        801.13	$     152.39	$     953.52
Total manufacturing cost			$  2,473.52
3)
Yes; if some jobs require a large amount of machine time and a small amount of labor time, they would be charged substantially less overhead cost if a plantwide rate based on direct labor hours were used. It ap- pears, for example, that this would be true of Job 203 which required considerable machine time to complete, but required a relatively small amount of labor hours.