Homework SourseHigh Desert Potteryworks makes a variety of pottery products
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:
Job 205 was started on August 1 and completed on August 10. The company\'s cost records show the following information concerning the job:
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 27 units, what would be the unit product cost?
| Department | ||||||
| Molding | Painting | |||||
| Direct labor-hours | 33,000 | 55,900 | ||||
| Machine-hours | 83,000 | 40,000 | ||||
| Fixed manufacturing overhead cost | $ | 273,900 | $ | 553,410 | ||
| Variable manufacturing overhead per machine-hour | $ | 2.20 | - | |||
| Variable manufacturing overhead per direct labor-hour | - | $ | 4.20 | |||
Solution
1. Compute the predetermined overhead rates used in the Molding Department and the Painting Department.
Molding department = Estimated overhead cost/estimated machine hour
= 273900/83000
Molding department = 3.3+2.2 = 5.50 per machine hour
Painting department = Estimated overhead cost/estimated Labour hour
= 553410/55900
Painting department = 9.9+4.2 = 14.10 per labour hour
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 27 units, what would be the unit product cost?
| Overhead applied | |
| Molding depatment (330*5.5) | 1815 |
| Painting department (135*14.1) | 1903.5 |
| Total overhead cost | 3718.5 |
