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:

	Department
	Molding			Painting
Direct labor-hours		30,500			51,400
Machine-hours		84,000			34,000
Fixed manufacturing overhead cost	$	168,000		$	452,320
Variable manufacturing overhead per machine-hour	$	3.20			-
Variable manufacturing overhead per direct labor-hour		-		$	5.20

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
	Molding			Painting
Direct labor-hours		83			130
Machine-hours		340			66
Direct materials	$	936		$	1,120
Direct labor cost	$	710		$	1,020

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 28 units, what would be the unit product cost?

Answer 1

Molding Painting 30500 51400 84000 34000 168000 452320 Direct labor hour Machine Hours Fixed Manufacturing overhead cost Fixed Manufacturing overheads Rate : (168000/84000, 452320/51400) ADD: Variable overhead rate Perdetermined overhead rate 2.00 8.800 3.20 5.20 Molding 5.20 5.20 14.00 Painting 14.00 Predetermined overhead rate Direct labor hour Machine Hours Manufacturing overheads applied : Rate * Base Molding Painting 83 130 340 66 1768 1820 Molding | Painting 1768 1820 936 1120 710 1020 3414 3960 7374 Overhead Cost Applied Direct Material Direct Labor cost Manufactruing Cost Total overhead Cost applied Units product cost = 7374/28 263.3571429

Answers Predetermined overhead rate Applied overheads Total overhead ocst applied Units product cost = 7374/28 Molding Painting 5.20 14.00 1768.00 1820.00 7374 263.36