High Desert Potteryworks makes a variety of pottery products

High Desert Potteryworks makes a variety of pottery products that it sells to retailers such as Home Depoft. The company uses a job-order costing system in which 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\'s management made the following estimates Department Molding Painting 34,500 80,000 Direct labor-hours Machine-hours Direct materials cost Direct labor cost Fixed manufacturing overhead cost Variable manufacturing overhead per machine-hour Variable manufacturing overhead per direct labor- 58,500 39,000 $186,000 $196,000 $287,000 $518,000 $248,000 $520,650 $2.60 $4.60 hour 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 Direct labor-hours Machine-hours Materials placed into production Direct labor cost Molding 80 380 $944 $710 Painting 131 69 $1,200 S950 Required 1. Compute the predetermined overhead rate used during the year in the Molding Department. Compute the rate used in the Painting Department. (Round your answers to 2 decimal places.) Predetermined overhead rate per MH per DLH Molding Department Painting Department

Solution

1)Computation of Predetermined Overhead Molding Painting Fixed overhead rate per MH $248000/80000 $520650/58500 $3.10 8.9 Variable overhead rate per MH $2.60 $4.60 Predetermined overhead rate per MH $5.7 Per MH $ 13.50 Per DLH 2. Computation of Total Overhead Cost Applied Total overhead cost applied to job Molding = 380* 5.7 = $ 2166 Painting = 131 * $13.50 = $ 1768.50 Total overhead applied = 3934.50    3(a) Computation of Total Cost recorded for the Job Department Total Molding Painting direct material 944 1200 2144 direct labor 710 950 1660 overhead applied 2166 1768.5 3934.5 Total 3820 3918.5 7738.5 3(b)Unit Cot of Product, If 32 Unit in Job unit product cost = $7738.50 / 32 =$241.83 per unit 4). Molding Painting Actual overhead Incurred 463920 637900 Overhead applied [79600*5.7] 453720 [50000*13.50] 675000 overhead underapplied /(overhapplie) 10200 -37100 Underapplied Overapplied