Question

this queistion but also what is the the total manufacturing cost and how do you calulate that.

thank you.

1 White Company has two departments, Cutting and Finishing The company uses a job-order costing system and computes a predetermined overhead rate in each department. The Cutting Department bases its rate on machine hours, and the Finishing Department bases its rate on direct labor-hours. At the beginning of the year, the company made the following estimates 1 points Sped Direct labor-hours Machine-hours Total Fixed manufacturing overhead cost Variable manufacturing overhead per sachine-hour Variable manufacturing overhead per direct labor-hour Department Cutting Finishing 9,000 61,000 68,400 1,400 $390,000 $456.000 $ 4.00 5 3.75 Book Required: 1. Compute the predetermined overhead rate for each department 2. The job cost sheet for Job 203, which was started and completed during the year, showed the following: References Direct labor hours Machine-hours Direct materials Direct labor cost Department Cutting Finishing 5 17 4 4 5770 $ 370 5115 $ 391 Using the predetermined overhead rates that you computed in requirement (1), compute the total manufacturing cost assigned to Job 3. Would you expect substantially different amounts of overhead cost to be assigned to some jobs if the company used a plantwide predetermined overhead rate based on direct labor-hours, rather than using departmental rates? Complete the question by entering your answers in the tabs given below. Required 1 Required 2 Required 3 Compute the predetermined overhead rate for each department. (Round your answers to 2 decimal places.) Department Cutting per MH Finishing Predetermined overhead rate per DLH Required Required 2 > M Gew

Answer 1

Answer to Requirement 1:

Cutting Department:

Estimated manufacturing overhead = Variable manufacturing overhead per machine hour * Estimated machine hours + Fixed manufacturing overhead
Estimated manufacturing overhead = $4.00 * 68,400 + $390,000
Estimated manufacturing overhead = $663,600

Predetermined overhead rate = Estimated manufacturing overhead / Estimated machine hours
Predetermined overhead rate = $663,600 / 68,400
Predetermined overhead rate = $9.70 per machine hour

Finishing Department:

Estimated manufacturing overhead = Variable manufacturing overhead per direct labor hour * Estimated direct labor hours + Fixed manufacturing overhead
Estimated manufacturing overhead = $3.75 * 61,000 + $456,000
Estimated manufacturing overhead = $684,750

Predetermined overhead rate = Estimated manufacturing overhead / Estimated direct labor hours
Predetermined overhead rate = $684,750 / 61,000
Predetermined overhead rate = $11.23 per direct labor hour

Answer to Requirement 2:

Cutting Department:

Manufacturing cost = Direct materials + Direct labor cost + Manufacturing overhead applied
Manufacturing cost = $770.00 + $115.00 + $9.70 * 84
Manufacturing cost = $770.00 + $115.00 + $814.80
Manufacturing cost = $1,699.80

Finishing Department:

Manufacturing cost = Direct materials + Direct labor cost + Manufacturing overhead applied
Manufacturing cost = $370.00 + $391.00 + $11.23 * 17
Manufacturing cost = $370.00 + $391.00 + $190.91
Manufacturing cost = $951.91

Job 203:

Total manufacturing cost = Manufacturing cost of Cutting Department + Manufacturing cost of Finishing Department
Total manufacturing cost = $1,699.80 + $951.91
Total manufacturing cost = $2,651.71

Answer to Requirement 3:

Yes, if the job requires higher amount of machine hours and less amount of direct labor hour, then overhead cost assigned using activity based costing would be higher than using plantwide overhead rate.