Question

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 Direct labor-hours Machine-hours Fixed manufacturing overhead cost Variable manufacturing overhead per machine-hour Variable manufacturing overhead per direct labor-hour Molding Painting 52,900 87,000 36,000 $234,900 $491,970 35,500 $ 2.80 $ 4.80 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 129 71 $ 942 $1,260 $.710 1,010 79 320

Answer 1

1) Predetermined Overhead Rate Molding Department Painting Department $14.10 per MH $5.50 per DLH

2) Total overhead cost $3,578.90

3A) Total manufacturing Cost Department Direct materials Direct labor Manufacturing overhead Total cost Molding $942 $710 $1,760 $3,412 Painting $1,260 $1,010 $1,818.90 Total $2,202 $1,720 $3,578.90 $4,088.90 $7,500.90

3B) Unit product cost $326.13 per un

Working Notes :

Req -1 Molding The estimated total manufacturing overhead cost in the Molding Department is artment: Particulars Estimated fixed manufacturing overhead Estimated variable manufacturing overhead Amount $234,900 $243,600 $2.80 per MH x 87,000 MHs Estimated total manufacturing overhead cost $478,500 Estimated MH overhead Rate per hour is $478500/87000MHs $5.5 Per MH Paintin The estimated total manufacturing overhead cost in the Painting Department is artment Particulars Estimated fixed manufacturing overhead Estimated variable manufacturing overhead Amount $491,970 $253,920 $4.80 per DLH x 52900 DLHs Estimated total manufacturing overhead cost $745,890 Estimated DLH overhead rate Per hour is $745890/52900 $14.10 Per DLH

Req-2 Molding Department overhead applied: 320 MH x $5.50 per MH $1,760 $1,819 $3,578.90 Painting Department overhead applied 129 DLH x $14.10 per DLH Total overhead cost Req 3A Direct Material & Direct labour cost was given in the problem Manufacturing Over head for Molding Manufacturing Over head for Painting $320 5.5 $129 14.1 Req 3B Unit product cost for Job 205 is Total manufacturing costNumber of units in the job $7501/23 units Unit product cost for Job 205 $326.13 Per Unit