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 34,500 53,000 89,000 37,000 $ 222,500 $477,000 $ 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 78 135 380 67 $ 946 $1,180 $ 740 $1,010

Answer 1

Required 1 :
Predetermined Overhead Rate
Molding department [ ( 222500 / 89000 ) + 2.80 ] =	5.30	per MH
Painting department [ ( 477000 / 53000 ) + 4.80 ] =	13.80	per DLH

Required 2 :
Total overhead cost = ( Machine hours worked in molding department * Molding department predetermined overhead rate ) + ( Direct labor hours worked in Painting department * Painting department predetermined overhead rate )
Total overhead cost = ( 380 * 5.30 ) + ( 135 * 13.80 ) =	3877

Required 3A :
	Department
	Molding	Painting	Total
Direct materials	946	1180	2126
Direct labor	740	1010	1750
Manufacturing overhead	2014 [ 380*5.30 ]	1863 [ 135*13.80 ]	3877
Total cost	3700	4053	7753

Required 3B :
Unit product cost = Total product cost / Number of units = 7753 / 29 =	267.34	per unit