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 34,500 57,400 Machine-hours 83,680 31,000 Fixed manufacturing overhead cost $215,880 $533,820 Variable manufacturing overhead per machine-hour 2.60 Variable manufacturing overhead per direct - $ 4.60 labor-hour Job 205 was started on August 1 and completed on August 10. The company's cost records show the following information concerning the job: Direct labor-hours Machine-hours Direct materials Direct labor cost Department MoldingPainting 82 132 330 74 $ 932 $ 1,109 $720 $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 29 units, what would be the unit product cost?

Answer 1

1
calculation of predetermine overhead rate of departments
	Department
	Molding	Painting
fixed manufacturing overhead cost	215800	533820
machine hour	83000	31000
direct labor hour	34500	57400
variable manufacturing overhead rate	2.6	4.6
variable overhead based on machine hour	215800
variable overhead based on labor hour		264040
total overhead	431600	797860
predetermine overhead rate	5.2	13.9
2
calculation of total overhead cost applied to job 205
	Department
	Molding	Painting
manufacturing overhead:
based on machine hour(330*5.2)	1716
based on labor hour(132*13.9)		1834.8
total overhead cost	1716	1835
3.a
calculation of total manufacturing cost to job 205
	Department
	Molding	Painting	Total
direct material	932	1100	2032
direct labor cost	720	1020	1740
manufacturing overhead	1716	1835	3551
Total cost	3368	3955	7323
3.b
If the job contained 29 units then
unit product cost	= total cost /total unit
	= $7323/29 units
	252.517
	=253