Question

problem 2-19 Multiple Predetermined Overhead Rates; Applying Overhead (LO2-4, LO2-2, L02-4) 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 Direct labor-hours Molding Painting 32,500 56,200 Machine-hours 81,000 38,000 Fixed manufacturing overhead cost $170,100 $505,500 Variable manufacturing overhead per machine-hours 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 formation concerning the job Department MoldingPainting Direct labor-hours Machine-hours Direct materials Direct labor cost 320 $948 $1,200 $ 740 5 930 Required: 1 Compute the predetermined overhead rates used in me Molding Department and the Ping Department 2. Compute the total overhead cost applied to job 205 What would be the total manufacturing con recorded for job 205 3- the job contained 34 u s what would be the unit product cost o

Answer 1

Pre determined overhead rate = Fixed overhead/driver + variable rate

Molding = 170100/81000 + 3.20 =$5.3 per machine hour

Painting = 505800/56200 + 5.20

=$14.2 per labor hour

2.overhead cost applied

Molding = 320*5.2 =$1664

Painting = 133*14.2 =$1888.6

Total applied =$3552.6

3.total manufacturing cost = direct material + direct labor + overhead applied

= 948+1200+740+980+3552.6

=$7420.6

4. Unit cost = 7420.6/34 =$218.25