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:

	Department
	Molding			Painting
Direct labor-hours		36,000			54,800
Machine-hours		89,000			33,000
Fixed manufacturing overhead cost	$	258,100		$	548,000
Variable manufacturing overhead per machine-hour	$	2.40			-
Variable manufacturing overhead per direct labor-hour		-		$	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:

	Department
	Molding			Painting
Direct labor-hours		81			128
Machine-hours		370			67
Direct materials	$	942		$	1,300
Direct labor cost	$	710		$	950

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 26 units, what would be the unit product cost?

Answer 1

A B с 1 Predetermined Overhead Rate $5.30 per machine hour $14.40 per direct labor hour Overhead Cost $1,961.00 $1.843.20 $3.804.20 2 3 Molding 4 Painting 5 6 2 7 8 Molding 9 Painting 10 Total overhead cost applied to Job 205 11 12 3-a. 13 Direct materials 14 Direct labor 15 Overhead applied 16 Total manufacturing cost recorded for Job 205 17 18 3-b. 19 Unit product cost $2.242.00 $1,660.00 $3.804.20 $7,706.20 $296.39 Calculations are shown below: A B с 1 1 2 Predetermined Overhead Rate 3 Molding 1=(258100/89000)+2.4 per machine hour 4 Painting 1=(548000/54800)+4.4 per direct labor hour 5 6 2 7 Overhead Cost 8 Molding =370*B3 9 Painting =128*B4 10 Total overhead cost applied to Job 205 =B8+B9 11 12 3-a. 13 Direct materials =942+1300 14 Direct labor 1=710+950 15 Overhead applied =B10 16 Total manufacturing cost recorded for Job 205 =SUM(B13:B15) 17 18 3-b. 19 Unit product cost =B16/26