Question

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: 20 points Department Cutting Finishing 8,500 74,000 60,300 2,100 $390,000 $496,000 2 eBook Direct labor-hours Machine-hours Total fixed manufacturing overhead facturing overhead cost Variable manufacturing overhead per machine-hour Variable manufacturing overhead per direct labor-hour Print S 4.00 - - $ 3.75 References 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: Department Cutting Finishing Direct labor-hours 5 19 Machine-hours 86 Direct materials $700 $ 350 Direct labor cost $110 $ 418 Using the predetermined overhead rates that you computed in requirement (1), compute the total manufacturing cost assigned to Job 203. 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 Required Required 1 Compute the predetermined overhead rate for each department. (Round your answers to 2 decimal places.) Department Cutting Finishing per MH per DLH Predetermined overhead rate Required 1 Required 2 >

Answer 1

1) Predetermine overhead rate

	Cutting	Finishing
Predetermine overhead rate	(390000/60300+4) = 10.47 per MH	(496000/74000+3.75) = 10.45 per DLH

2) Total manufacturing cost

	Job 203
Direct material (700+350)	1050
Direct labor (110+418)	528
Overhead (86*10.47+19*10.45)	1098.97
Total manufacturing cost	2676.97 or 2677

3) Yes