Question

9 Chapter 2 Assignment 6 Help Problem 2-19 Multiple Predetermined Overhead Rates; Applying Overhead [LO2-1, L02-2, LO2 4] High Desert Potteryworks makes a variety of pottery products that it sells to retailers. The company uses a job-order costin system in which departmental predetermined overhead rates are used to apply manufacturing overhead cost to jobs. The predetermired 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: rtment Direct labor-hours Machine-hours Fixed manufacturing overhead cost Variable manufacturing overhead per machine-hour Variable manufacturing overhead per direct labor-hour Molding Painting 31,000 50,300 87,000 38,080 $234,900 sse3,000 $ 2.20 $ 4.20

Answer 1

Answers

• All working forms part of the answer
• Requirement 1

Working		Molding	Painting
A [given]	Total Fixed manufacturing Overhead cost	$234,900	$503,000
	Allocation base	machine hours	direct labor hours
B [given]	Amount of allocation base	87,000	50,300
C = A/B	Fixed Overhead rate	$                     2.70	$                 10.00
D [given]	Variable overhead rate	$                     2.20	$                    4.20
E = C+D	Predetermined Overhead rates = ANSWERS	$                     4.90 per machine hour	$                 14.20 per direct labor hours

• Requirement 2

	Molding	Painting	Total
Total Overhead cost applied	$1,666 [340 MHs x $ 4.90]	$1,818 [128 DLHs x $ 14.20]	$3,484 = ANSWER

• Requirement 3 ‘a’

	Molding	Painting	Total
Direct Material Cost	$938	$1,160	$2,098
Direct Labor Cost	$740	$980	$1,720
Manufacturing Overhead cost applied	$1,666	$1,818	$3,484
Total manufacturing cost recorded for Job 205			$7,302

• Requirement 3 ‘b’

Unit product Cost = $7302 / 24 units
= $ 304.23 = Answer