Problem 219 Multiple Predetermined Overhead Rates Applying O

Problem 2-19 Multiple Predetermined Overhead Rates; Applying Overhead [LO2-1, LO2-2, LO2-4] 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 34,500 53,200 87,000 31,000 Direct labor-hour:s Machine-hours Fixed manufacturing overhead cost Variable manufacturing overhead per machine-hour Variable manufacturing overhead per direct labor-hour $191,400 $484,120 $ 3.00 -$5.00 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 MoldingPainting Direct labor-hours Machine-hours Direct materials Direct labor cost 78 390 134 $ 938 $1,100 $ 700 970 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 30 units, what would be the unit product cost? Complete this question by entering your answers in the tabs below Req 1 Req 2 Req 3A Req 3B

Solution

Answer 1 Predetermined Overhead rate used in Molding department = Fixed manufacturing overhead cost / Total Machine hours = $191400 / 87000 hours = $2.20 per machine hour Predetermined Overhead rate used in Painting department = Fixed manufacturing overhead cost / Total direct labour hours = $484120 / 53200 hours = $9.10 per direct labour hour Answer 2 Total overhead cost applied to Job 205 Overhead applied to Job 205 Moulding (390 machine hours * $2.20) $858.00 Painting (134 direct labour hours * $9.10) $1,219.40 Total overhead cost applied to Job 205 $2,077.40 Answer 3 Total Manufacturing cost recorded for Job 205 Department Molding Painting Total Direct Material $938.00 $1,100.00 $2,038.00 Direct Labour $700.00 $970.00 $1,670.00 Manufacturing Overhead $858.00 $1,219.40 $2,077.40 Total Cost $2,496.00 $3,289.40 $5,785.40 Answer 4 Unit product cost = Total cost recorded for Job 205 / Total no.of units contained in Job 205 = $5785.40 / 30 units = $192.85