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 35,000 59,100 Machine-hours 86,000 37,000 Fixed manufacturing overhead cost $ 275,200 $ 561,450 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 73 133 Machine-hours 340 70 Direct materials $ 940 $ 1,140 Direct labor cost $ 750 $ 960 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?

Answer 1

Req 1.
Molding OH rate per MH:
Variable OH rate per MH			2.40
Fixed OH rate (275200/86000)			3.2
Oh rate per MH			5.6
painting OH rate per DLH
Variable OH per DLH			4.4
Fixed OH rate (561450/59100)			9.5
Oh rate per DLH			13.9
Rreq 2.
MH used in Job 205 f Molding			340
DLH used in Job 205 of painting			133
Molding OH rate per MH'			1904
painting OH rate per DLH			1849
OH applied to Job 205			3753
Req 3.
Total cost of Job 205
		Molding	Painting	Total
Material cost		940	1140	2080
Labour cost		750	960	1710
OH cost		1904	1849	3753
Total cost		3594	3949	7543
Req 4.
Total Manufacturing cost of Job 205				7543
Divide: Number of units				24
Cost per unit				314.29