Question

am (Chapters 1, 2, 3, 5, 7 and 8) 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 38,5ee53,300 88,00 24,000 $228.00 $511,680 $ 2.40 $ 4.40 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 126 390 Direct labor hours Machine - hours Direct saterials Direct labor cost $936 $ 720 $1.1 $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? < Prey 6 of 27 !! Next >

Answer 1

Solution 1:

Computation of overhead rate
Particulars	Molding	Painting
Fixed overhead costs	$228,800.00	$511,680.00
Variable overhead costs	$211,200.00	$234,520.00
Total overhead	$440,000.00	$746,200.00
Allocation base	Machine hour	Labor hour
Quantity of allocation base	88000	53300
Overhead rate per machine hour / labor hour	$5.00	$14.00

Solution 2:

Computation of overhead applied to Job 205
Particulars	Amount
Overhead applied - Molding	$1,950
Overhead applied - Painting	$1,764
Total	$3,714

Solution 3a:

Computation of manufacturing cost - Job 205
Particulars	Molding	Painting	Total
Direct materials	$936	$1,180	$2,116
Direct labor	$720	$1,010	$1,730
Manufacturing overhead	$1,950	$1,764	$3,714
Total costs	$3,606	$3,954	$7,560

solution 3b:

Computation of unit product cost of Job 205
Particulars	Amount
Total costs	$7,560
Nos of units produced	37
Unit product cost	$204.32