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		37,000			59,400
Machine-hours		83,000			32,000
Fixed manufacturing overhead cost	$	207,500		$	558,360
Variable manufacturing overhead per machine-hour	$	2.20			-
Variable manufacturing overhead per direct labor-hour		-		$	4.20

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		74			133
Machine-hours		350			68
Direct materials	$	930		$	1,260
Direct labor cost	$	690		$	960

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 32 units, what would be the unit product cost?

Answer 1

Compute the predetermined overhead rates used in the Molding Department and the Painting Department.

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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 32 units, what would be the unit product cost?

=$7293.80/32 units =$227.93 per units