High Desert Potteryworks makes a variety of pottery products that it sells to re
ID: 2611125 • Letter: H
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 27 units, what would be the unit product cost?
Department Molding Painting Direct labor-hours 33,000 55,900 Machine-hours 83,000 40,000 Fixed manufacturing overhead cost $ 273,900 $ 553,410 Variable manufacturing overhead per machine-hour $ 2.20 - Variable manufacturing overhead per direct labor-hour - $ 4.20Explanation / Answer
1. Compute the predetermined overhead rates used in the Molding Department and the Painting Department.
Molding department = Estimated overhead cost/estimated machine hour
= 273900/83000
Molding department = 3.3+2.2 = 5.50 per machine hour
Painting department = Estimated overhead cost/estimated Labour hour
= 553410/55900
Painting department = 9.9+4.2 = 14.10 per labour hour
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 27 units, what would be the unit product cost?
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