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 37,000 56,700 82,000 32,000 $ 221,400 $544,320 $ 2.80 4.80 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 Molding Painting 78 135 320 70 $ 936 $ 1,160 $ 720 $ 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 25 units, what would be the unit product cost? Complete this question by entering your answers in the tabs below. Req 1 Rec'2 Req 3A Req 3B Compute the predetermined Overhead Rates used in the Molding Department and the Painting Department. (Round your answers to 2 decimal places.) Predetermined Overhead Rate Molding Department per MH Painting Department per DLH

Answer 1

1)

Predetermined overhead rate used in molding department = Estimated manufacturing overhead cost / Estimated machine hours + Variable manufacturing overhead cost per machine hour

= 221400 / 82000 + 2.80

= 2.70 + 2.80

= $5.50 per machine hours

Predetermined overhead rate used in painting department = Estimated manufacturing overhead cost / Estimated direct labor hours + Variable manufacturing overhead cost per direct labor hour

= 544320 / 56700 + 4.80

= 9.6+4.80

= $14.40 per labour hours

2)

Overhead cost applied to Job 205 = Machine hours in molding department * Overhead rate for molding department + Direct labor hours in paining department + Overhead rate for paining department

= 320 * 5.50 + 135 * 14.40 = $1760+$1944

= $3704

3 a)

	Molding	painting	Total
Direct material	$936	$1160	$2096
Direct labour	$720	$970	$1690
Manufacturing overhead	$1760	$1944	$3704
Total cost	$3416	$4074	$7490

b)

Unit product cost = $7490/25 = 299.6