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 38 units, what would be the unit product cost?
| Department | ||||||
| Molding | Painting | |||||
| Direct labor-hours | 30,500 | 57,900 | ||||
| Machine-hours | 86,000 | 38,000 | ||||
| Fixed manufacturing overhead cost | $ | 275,200 | $ | 544,260 | ||
| Variable manufacturing overhead per machine-hour | $ | 2.40 | - | |||
| Variable manufacturing overhead per direct labor-hour | - | $ | 4.40 | |||
Solution
Predetermined overhead rates
In molding Department (based on machine hours)= $275200/86000=$3.20
In painting Department(based on labour hours)=$544260/57900=$9.40
Total overhead cost of the job
Molding deptt=$3.20×320=$1024
Painting deptt=$9.40×127=$1193.8
Total=$2217.80
Total manufacturing cost for the job=
Direct Material=$2140
Direct Labour=$1690
Variable overhead=($2.4×320)+($4.4×127)=$1326.80
Allocated fixed overheads=$2217.80
Total manufacturing cost for the job=$7374.60
Unit product cost=$7374.60/38units=$194.068/- per unit
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