Question

Use the data to solve the problems

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 59,900 90,00 30,000 $297,000 $587,020 $ 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 74 133 330 67 $ 934 $1,300 $ 730 $ 980 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?

Answer 1

Sol.(1) Computation of the predetermined Overhead rates used in the molding debardment and the painting department fixed Overhead hate per Machine Hour Molding Department Fixed Manufacturing overhead Cost Machine - Hours $ 297,000 90,000 $3.30 Per Machine Hour

Variable Manufacturing Overhead ber Machine Howx = $2.40 Predetermined Overhead Rate Molding Departments fixed overhead Rate ber Machine Hour +Veuriable Dresksed Rate per machine Hour $ 3.30 + $ 2.40 $ 5,70 per Machine Houn

Direct labor Hour -fixed Overhead Rate per Penting Department fixed Manufacturing Overhead Cost Direct labor-Hours $ 5 87,020 59.900 $9.80 Per Direct labor Hour variable Mamusfesturing overbead per Direct laber Hewr=$4.40 Predetermined Overhead Rate Parinting Department * fixed overhead Rate per Direct laber Hour + Vertiable Overhead Rate per Direct labor Hour $ 9.80 + $4.40 $14.20 Per Direct labor Hour

Sol.c2), Computation of Totened Overhead Cost Applied- Molding Department Totaal overhead CBt=> Machine-Hour's X Predetermined overhead Rate 330 Hours X $5.70 Per Machine Hour $ 1881 Painting Department Total overhead Cost => = Direct-labor Hours & Predetermined overhead Rate 133 DLH X $ 14.20 PerDLH - $1888.60 Total Overhead Cost Applied to Job 205 => Melding departmeet Overhead Cestit Painting department Cost $ 1,881 + $1888.60 $ 3,769.60 OR $ 3,770 Total Overhead Cost Apoplied to Job 205 = $3,770 1

Sol.(3.9) Calculation of total manuefacturing Cost recorded for Job 205 — Direct Materiells Direct labor Manufacturing Overhead Totaul Cost Department Molding Painting Total $ 934 $ 1300 $2234 $ 980 $1,710 $ 1,881 $ 1,888.60 $ 3,769.60 $ 3,545 $4,168.60 $ 7,713.60 $ 730 Total Manuefacturing cost recorded for Job 205 = $7,714

Sol(3b) Calculation of Wait product cost if the Jeb Contained 25 vuit's Unit product Costa Total Manuifacturing Cost Number of unit contained in Job $ 7,714 25 $308.56 Per Unit Unit product Cost $308.56 Per Unit