Question

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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 Department Molding Painting 35,000 57,200 86,000 30,000 $180, 600 $497,640 $ 3.00 - $ 5.00 Fixed manufacturing overhead cost Variable saufacturing overhead per machine-hour Variable sufacturing overhead per direct labor-hour 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 Hachis-hours Direct materials Direct labor cost Department Molding Painting 78 133 350 67 $942 $1,300 $ 700 $ 990 Required: 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 22 units, what would be the unit product cost? Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Req 3A Req 3B

Answer 1

1.

Predetermined overhead rate:

Molding department = $180,600/86,000 + $3 = $5.1 per machine hour

Painting department = $497,640/57,200 + $5 = $13.7 per direct labor hour

2.

Total overhead cost = 350*$5.1 + 133*$13.7 = $3,607.1

3.

	Molding	Painting	Total
Direct material	$942	$1,300	$2,242
Direct labor cost	700	990	1,690
Manufacturing overhead	1,785	1,822.1	3,607.1
Total cost	$3,427	$4,112.1	$7,539.1

4.

Unit product cost = $7,539.1 / 22 = $342.69 per unit