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 labour cost. At the beginning of the year, the company made the following estimates: |
Department | ||||||
Cutting | Finishing | |||||
Direct labour-hours | 6,500 | 34,500 | ||||
Machine-hours | 48,750 | 4,500 | ||||
Manufacturing overhead cost | $ | 487,500 | $ | 553,500 | ||
Direct labour cost | $ | 65,000 | $ | 307,500 | ||
Required: |
1. |
Compute the predetermined overhead rate to be used in each department. (Round your answers to 2 decimal places.) |
2. |
Assume that the overhead rates that you computed in part (1) are in effect. The job cost sheet for job 203, which was started and completed during the year, showed the following: |
Department | ||||||
Cutting | Finishing | |||||
Direct labour-hours | 8 | 25 | ||||
Machine-hours | 75 | 5 | ||||
Materials requisitioned | $ | 540 | $ | 350 | ||
Direct labour cost | $ | 88 | $ | 165 | ||
Compute the total overhead cost applied to job 203. (Do not round intermediate calculations and round your answer to 2 decimal places.) |
3. |
Would you expect substantially different amounts of overhead cost to be assigned to some jobs if the company used a plantwide overhead rate based on direct labour cost, rather than using departmental rates? |
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|
1) Cutting overhead rate = 487500/48750 = 10 per machine hour
Finishing overhead rate = 553500/307500 = 180% of labor cost
2) Total manufacturing cost
Cutting | Finishing | Total | |
Direct material | 540 | 350 | 890 |
Direct labor | 88 | 165 | 253 |
Overhead | 750 | 297 | 1047 |
Total | 1378 | 812 | 2190 |
Total overhead cost applied = 750+297 = 1047
3) Yes
White Company has two departments: cutting and finishing. The company uses a job-order costing system and...
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 labour cost. At the beginning of the year, the company made the following estimates: 11 Department Cutting Finishing 6,500 34,500 48,750 4,500 $ 187,500 $553,500 $ 65,000 $307,500 Direct labour-hours Machine-hours Manufacturing overhead cost Direct labour cost 8.33 points...
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 labour cost. At the beginning of the year, the company made the following estimates: Department Cutting Finishing Direct labour-hours 6,300 34,300 Machine-hours 48,250 4,300 Manufacturing overhead cost $ 472,850 $ 544,500 Direct labour cost $ 63,000 $ 302,500 Required:...
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 . . . . . . . . . . . . . . . . . . . . ....
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 al fixed manufacturing overhead cost Variable manufacturing overhead per machine-hour Variable manufacturing overhead per direct labor-hour Department Cutting Finishing 8,100 67,000 53,500 3,300...
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 direct labor-hour Department Cutting Finishing 8,500 90,000 60,700 1,100...
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 9,000 77,000 Machine-hours 56,600 3,600 Total fixed manufacturing overhead cost $ 390,000 $ 527,000 Variable manufacturing overhead per machine-hour $ 4.00...
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 7,900 86,000 Machine-hours 64,600 2,600 Total fixed manufacturing overhead cost $ 390,000 $ 410,000 Variable manufacturing overhead per machine-hour $ 3.00...
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 direct labor-hour Department Cutting Finishing 7,800 64,000 68,300 3,600...
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 direct labor-hour Department Cutting Finishing 7,800 68,000 66,700 3,600...
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 direct labor-hour Department Cutting Finishing 8,500 65,000 62,700 1,200...