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: 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 35,500 52,100 84,000 39,000 $210,000 $479,320 $ 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: Direct labor-hours Machine-hours Direct materials Direct labor cost Department MoldingPainting 86 125 40069 $ 934 $1,140 $ 710 $ 970 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 35 units, what would be the unit product cost?

Answer 1

1) Molding department = (210000/84000+2.40) = 4.90 per MH

Painting department = (479320/52100+4.40) = 13.60 per DLH

2) Total overhead cost = (400*4.90+125*13.60) = 3660

3) Total manufacturing cost

	Molding	Painting	Total
Direct material	934	1140	2074
Direct labor	710	970	1680
Overhead	1960	1700	3660
Total	3604	3810	7414

3b) Unit product cost = 7414/35 = 211.83