White Company has two departments, Cutting and Finishing. The company uses a job

Question

White Company has two departments, Cutting and Finishing. The company uses a job-order costing system and computes a Department bases its rate on direct labor-hours. At the beginning of the year, the company made the following estimates: t. The Cutting Department bases its rate on machine-hours, and the Finishing Direct labor-hours Machine-hours Total fixed sanufacturing overhead cost Varlable manufacturing overhead per machine-hour Varlable manufacturing overhead per direct labor-hour 3,200 5 390,000 452,000 69,700 54.0e 3.75 es 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 Cutting Finishing Dlrect labor-hours Machine-hours Direct saterials Direct labor cost 85 $788 $368 $110 286 Peeti Prey 4of7

Explanation / Answer

Req 1. Cutting deptt: OH rate per MH: Variable OH per MH 4 Fixed OH per MH (390000/69700) 5.6 OH rate per MH: 9.6 Finishing Deptt: Variable OH per DLH 3.75 Fixed OH per DLH (452000/84000) 5.38 OH rate per DLH 9.13 Req 2. Cost of Job 203 Cutting Finishing Total Material 780 368 1148 Labour 110 286 396 OH Cutting (85 MH @ 9.60) 816 Finishing (13 DLH @9.13) 118.69 934.69 Total cost of Job 203 1706 772.69 2478.69 Req 3. Total OH of both deptt: Fixed OH of cutting 390000 Fixed oh of Finishing 452000 Variable OH of Cutting 278800 Variable OH of Finishing 315000 Total OH of both deptt: 1435800 Divide: DLH of both deptt 90800 (6800+84000) OH rate per DLH 15.81 Cost of Job 203 Cutting Finishing Total Material 780 368 1148 Labour 110 286 396 OH 284.58 (18 DLH @15.81 per DLH) Cost of Job 203 890 654 1828.58

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