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:

	Department
	Molding			Painting
Direct labor-hours		30,000			52,100
Machine-hours		83,000			39,000
Fixed manufacturing overhead cost	$	199,200		$	505,370
Variable manufacturing overhead per machine-hour	$	2.40			-
Variable manufacturing overhead per direct labor-hour		-		$	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
Direct labor-hours		89			129
Machine-hours		300			69
Direct materials	$	942		$	1,240
Direct labor cost	$	710		$	1,020

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 $942 $1,240 $2,182 Direct labor 710 1,020 1,730 Manufacturing overhead 0 Total cost $1,652 $2,260 $3,912

Answer 1

1)	predetermined overhead rates used in the Molding Department and the Painting Department.
	Molding
	= (fixed overhead cost / Number of machine-hours ) + Variable overhead cost per machine hours
	= ($199200/83000) +$2.40
	=$2.40+2.40
	=$4.8 per MH
	Painting
	= (fixed overhead cost / Number of labor hours ) + Variable overhead cost per labor hours
	=($505370/52100) +$4.40
	=$9.70+4.40
	=$14.10	per LH
2)	total overhead cost applied to Job 205
	=(Machine hours in molding *$4.8 per MH) + (Labor hours in Painting *$14.10 per LH)
	=(300 hours *$4.8) + (129 hours *$14.10)
	=$3259
3a)	total manufacturing cost recorded for Job 205
		Department		Total
		Molding	Painting
	Direct materials	$            942	$        1,240	$        2,182
	Direct labor	$            710	$        1,020	$        1,730
	Manufacturing overhead	$        1,440	$        1,819	$        3,259
	Total cost	$        3,092	$        4,079	$        7,171
3b)	If the job contained 37 units, what would be the unit product cost
	=total manufacturing cost/number of units
	=$7171/37
	=$193.81 per unit
	=$194 per unit (rounded off)