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 36,000 51,700 89,000 40,000 $222,500 $470,470 $ 2.60 - $ 4.60 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 82 133 320 72 $ 946 $1,280 $ 720 $ 960

Answer 1

1) Molding overhead rate = 222500/89000+2.60 = 5.10 per MH

Painting overhead rate = 470470/51700+4.60 = 13.70 per DLH

2) Total overhead cost = (320*5.1+13.70*133) = 3454

3) Total manufacturing cost

	Molding	Painting	Total
Direct material	946	1280	2226
Direct labor	720	960	1680
Overhead	1632	1822	3454
Total	3298	4062	7360

4) Unit product cost = 7360/35 = 210.29