High Desert Potteryworks makes a variety of pottery products that it sells to re

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:

Job 205 was started on August 1 and completed on August 10. The company's cost records show the following information concerning the job:

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 35 units, what would be the unit product cost?

Molding Painting Direct Labor Hours 31,500 50,700 Machine Hours 88,000 39,000 Fixed Manufacturing Overhead Cost 202,400 486,720 Variable Manufacturing Overhead per Machine-hour 2.60 ---- Variable Manufacturing Overhead per direct Labor-hour --- 4.60

Explanation / Answer

Req 1. Pre-determined OH rate: Molding: Fixed Manufacturing OH (202400/88000): 2.3 Variable Manufacturing Oh: 2.6 OH rate per MH 4.9 Painting: Fixed manufacturing OH (486720/50700): 9.6 Variable Manufacturing OH: 4.6 OH rate per DLH 14.2 Req 2. OH applied to Job 205: OH of Molding (310 MH @ 4.90) 1519 Painting OH (125 DLH @ 14.20) 1775 Total OH applied in Job 205 3294 Req 3-a: Total Cost of Job 205" Molding Painting Total Direct material 946 1240 2186 Direct Labor 690 980 1670 OH 1519 1775 3294 Total Cost of Job 205" 3155 3995 7150 Req 3-b: Total cost of Job 205 7150 Divide: Number of Units 35 Cost per unit 204.29

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