Question

Ch 2 HW i Saved Help Save & Exit Submit Check my work 3 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: 1 points Department Cutting Finishing 6,200 72,000 60,100 3,000 $ 370,000 $ 594,000 $ 2.00 $ 2.75 Direct labor-hours Machine-hours Total fixed manufacturing overhead cost Variable manufacturing overhead per machine-hour Variable manufacturing overhead per direct labor-hour Skipped eBook Files Required: 1. Compute the predetermined overhead rate for each department. 2. The job cost sheet for Job 203, which was started and completed during the year, showed the following: Print References Direct labor-hours Machine-hours Direct materials Direct labor cost Department Cutting Finishing 5 13 82 3 $ 750 $370 $ 125 $325 Using the predetermined overhead rates that you computed in requirement (1), compute the total manufacturing cost assigned to Job 203. 3. Would you expect substantially different amounts of overhead cost to be assigned to some jobs if the company used a plantwide predetermined overhead rate based on direct labor-hours, rather than using departmental rates? Complete the question by entering your answers in the tabs given below. MC

Answer 1

1. Computation of predetermined overhead rate for each department:

Cutting Department:

Overhead Rate = Total Fixed Manufacturing Overhead Rate/Machine Hours

Therefore,Overhead Rate = $370,000 / 60,100 =  $6.16 per hour

Finishing Department:

Overhead Rate = Total Fixed Manufacturing Overhead Rate/Direct Labor Hours

Therefore,Overhead Rate = $594,000 / 72,000 =  $8.25 per hour

2. Computation of Total Maufacturing cost assigned to Job 23:

Particulars Basis Total Cutting Department: $505 Fixed Manufacturing Overhead Cost Variable Manufacturing Overhead Cost (82 Hours*$6.16) (82 Hours *$2) $164 Finishing: Fixed Manufacturing Overhead Cost Variable Manufacturing Overhead Cost (13 Hours $8.25) (13 Hours*$2.75) $107 $36 Total Manufacturing Cost Assigned to Job 203 $812

3. Yes, there will be a change in the amount of overheads allocated to same jobs if the plantwise overheads rate are used instead of using activity based different rates as used above as it will lead to change in the rate of both predetermined overhead rate and allocation activity for cutting department.