Problem 2-19 Multiple Predetermined Overhead Rates; Applying Overhead [LO2-1, LO

Question

Problem 2-19 Multiple Predetermined Overhead Rates; Applying Overhead [LO2-1, LO2-2, LO2-4]

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 29 units, what would be the unit product cost?

Compute the Predetermined Overhead Rates used in the Molding Department and the Painting Department. (Round your answers to 2 decimal places.)

Compute the total overhead cost applied to Job 205. (Round "Predetermined overhead rate" to 2 decimal places. Round other intermediate calculations and final answers to the nearest dollar amount.)

What would be the total manufacturing cost recorded for Job 205? (Round "Predetermined overhead rate" to 2 decimal places. Round other intermediate calculations and final answers to the nearest dollar amount.)

If the job contained 29 units, what would be the unit product cost? (Round "Predetermined overhead rate" to 2 decimal places. Round other intermediate calculations to the nearest dollar amount. Round your final answer to 2 decimal places.)

Department Molding Painting Direct labor-hours 36,000 52,400 Machine-hours 88,000 39,000 Fixed manufacturing overhead cost $ 211,200 $ 487,320 Variable manufacturing overhead per machine-hour $ 2.40 - Variable manufacturing overhead per direct labor-hour - $ 4.40

Explanation / Answer

Req 1. Pre-determined OH rate: Molding Department: Fixed rate (211200/88000) 2.4 Variable 2.4 OH rate per MH 4.8 Painting Department: Fixed rate (487320/52400) 9.3 Variable 4.4 OH rate per DLH 13.7 Req 2: Overheads applied to Job 205: Moding department (310 MH @ 4.80) 1488 Painting Department (132 DLH @13.7) 1808.4 Total OH applied 3296.4 Req3: Total Manufacturing cost for Job 205: Material (946+1220) 2166 Labour (700+960) 1660 Overheads applied 3296.4 Total Manufacturing cost for Job 205: 7122.4 req 3-b: Total manufacturing cost 7122.4 Divide: Number of Units 29 Unit product cost 245.6

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