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 32,580 58,990 83,030 32, $240,700 $565,440 $ 2.60 - $ 4.60 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 Machine-hours Direct materials Direct labor cost Department MoldingPainting 84 125 370 67 $942 $1,280 $ 68e $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 24 units, what would be the unit product cost? < Prey 2 of 4 !!! Next >

Answer 1

Required 1 :
Predetermined Overhead Rate
Molding department [ ( 240700 / 83000 ) + 2.60 ]	5.50	per MH
Painting department [ ( 565440 / 58900 ) + 4.60 ]	14.20	per DLH

Required 2 :
Total overhead cost = ( Machine hours worked in molding department * Molding department predetermined overhead rate ) + ( Direct labor hours worked in Painting department * Painting department predetermined overhead rate )
Total overhead cost = ( 370 * 5.50 ) + ( 125 * 14.20 )	3810

Required 3A :
	Department
	Molding	Painting	Total
Direct materials	942	1280	2222
Direct labor	680	1010	1690
Manufacturing overhead	2035 [ 370*5.50 ]	1775 [ 125*14.20 ]	3810
Total cost	3657	4065	7722

Required 3B :
Unit product cost = Total product cost / Number of units = 7722 / 24	321.75	per unit