1.Calculation of predetermined overhead rate in each department
Cutting Department:
The estimated total manufacturing overhead cost in the Cutting Department is computed as follows:
Estimated fixed manufacturing overhead = $264,000
Estimated fixed manufacturing overhead = $2.00 per MH * 48,000 MH = $96,000
Estimated total manufacturing overhead cost = $264,000 + $96,000
= $360,000
The predetermined overhead rate is computed as follows:
Estimated total manufacturing overhead /Estimated total
machine-hours
= $360,000/48,000 MHs
= $7.50 per MH
Finishing Department:
The estimated total manufacturing overhead cost in the Finishing Department is computed as follows:
Estimated fixed manufacturing overhead = $366,000
Estimated fixed manufacturing overhead = $4.00 per DLH * 30,000 DLH = $120,000
Estimated total manufacturing overhead cost = $366,000 +
$120,000 = $486,000
The predetermined overhead rate is computed as follows:
Estimated total manufacturing overhead /Estimated total direct
labour-hours
= $486,000/30,000 MHs
= $16.20 per DLH
2.Total manufacturing cost assigned to Job No.203
Direct materials ($500 + $310) $810
Direct Labor($70 + $150) $220
Cutting Department (80 MHs * $7.50 per MH) $600
Finishing Department (20DLHs * $16.20 per DLH) $324 $924
Total Manufacturing Cost $1,954
3.Yes, if some jobs require a large amount of machine time and a small amount of labour time, they would be charged less overhead cost if a plantwide rate based on direct labour hours were used. It appears, for example, that this would be true of Job 203 which required considerable machine time to complete, but required a relatively small amount of labour hours.
EXERCISE 3-15 Departmental Overhead Rates (L03-1, L03-2, LO3-3] White Company has two departments, Cutting and Finishing....
EXERCISE 3-13 Departmental Predetermined Overhead Rates 103-1,CL03-2, L03-4 White Company has two departments, Cutting and Finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each department. The Cutting Department bases its rate on machine-hours, and the Finishing Department bases its rate on direct labor-hours. At the beginning of the year, the company made the following estimates. Cutting 6,000 48.000 5.264.000 Department Finishing 30.000 5.000 $.366.000 Direct labor hours Machine-hours Total fixed manufacturing overhead cost...
White Company has two departments, Cutting and Finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each department. The Cutting Department bases its rate on machine-hours, and the Finishing Department bases its rate on direct labor-hours. At the beginning of the year, the company made the following estimates: Department Cutting Finishing Direct labor-hours . . . . . . . . . . . . . . . . . . . . ....
Exercise 2-13 Departmental Predetermined Overhead Rates (LO2-1, LO2-2, LO2-4) White Company has two departments, Cutting and Finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each department. The Cutting Department bases its rate on machine-hours, and the Finishing Department bases its rate on direct labor-hours. At the beginning of the year, the company made the following estimates: Direct labor-hours Machine-hours Total fixed manufacturing overhead cost Variable manufacturing overhead per machine-hour Variable manufacturing overhead per...
Exercise 2-13 Departmental Predetermined Overhead Rates [LO2-1, LO2-2, LO2-4] White Company has two departments, Cutting and Finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each department. The Cutting Department bases its rate on machine-hours, and the Finishing Department bases its rate on direct labor-hours. At the beginning of the year, the company made the following estimates: Department Cutting Finishing Direct labor-hours 6,800 76,000 Machine-hours 58,400 1,600 Total fixed manufacturing overhead cost $ 380,000...
Exercise 2-13 Departmental Predetermined Overhead Rates [LO2-1, LO2-2, LO2-4] e Company has two departments, Cutting and Finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each department. The Cutting Department bases its rate on machine-hours, and the Finishing Department bases its rate on direct labor-hours. At the beginning of the year, the company made the following estimates White Machine-hours Total fixed manufacturing overhead cost 30,000 5,000 264,000 366,000 ,000 48,000 Variable manufacturing overhead per...
Exercise 2-13 Departmental Predetermined Overhead Rates [LO2-1, LO2-2, LO2-4] e Company has two departments, Cutting and Finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each department. The Cutting Department bases its rate on machine-hours, and the Finishing Department bases its rate on direct labor-hours. At the beginning of the year, the company made the following estimates White Machine-hours Total fixed manufacturing overhead cost 30,000 5,000 264,000 366,000 ,000 48,000 Variable manufacturing overhead per...
Exercise 2-13 Departmental Predetermined Overhead Rates [LO2-1, L02-2, LO2-4) White Company has two departments, Cutting and Finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each department. The Cutting Department bases its rate on machine-hours, and the Finishing Department bases its rate on direct labor-hours. At the beginning of the year, the company made the following estimates Department Cutting Finishing Direct labor-hours Machine-hours Total fixed manufacturing overhead cost Variable manufacturing overhead per machine-hour Variable...
Exercise 2-13 Departmental Predetermined Overhead Rates [LO2-1, LO2-2, L02-4] White Company has two departments, Cutting and Finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each department. The Cutting Department bases its rate on machine-hours, and the Finishing Department bases its rate on direct labor-hours. At the beginning of the year, the company made the following estimates Department Cutting Finishing Direct labor-hours Machine-hours Total fixed manufacturing overhead cost Variable manufacturing overhead per machine-hour Variable...
Exercise 2-13 Departmental Predetermined Overhead Rates (LO2-1, LO2-2, LO2-4) White Company has two departments, Cutting and Finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each department. The Cutting Department bases its rate on machine-hours, and the Finishing Department bases its rate on direct labor-hours. At the beginning of the year, the company made the following estimates: Direct labor-hours Machine-hours Total fixed manufacturing overhead cost Variable manufacturing overhead per machine-hour Variable manufacturing overhead per...
White Company has two departments, Cutting and Finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each department. The Cutting Department bases its rate on machine hours, and the Finishing Department bases its rate on direct labor-hours. At the beginning of the year, the company made the following estimates: Direct labor-hours Machine-hours Total fixed manufacturing overhead coat Variable manufacturing overhead per machine-hour Variable manufacturing overhead per direct labor-hour Department Cutting Finishing 6,000 30,000 48,000...