White Company has two departments, Cutting and Finishing. The company uses a job
ID: 2332383 • Letter: W
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: Department tting Finishing Direct labor-hours Machine-hour Total fixed manufacturing overhead cost Variable manufacturing overhead per machine-hour Variable manufacturing overhead per direct labor-hour 86,000 3,800 390,000 $ 447,000 6,700 50,800 $4.00 $ 3.79 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 lLabor-hours Machine-houra Direct materials Direct labor cost 83 $740 s 80 $360 220 Using the predetermined overhead rates that you computed in requirement (). 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 belovw Required 1 Required 2 Required 3 Using the predetermined overhead rates that you computed in requirement (1), compute the total manufacturing cost assigned to Job 203. (Round intermediate calculations to 2 decimal places and final answer to the nearest dollar amount.)Explanation / Answer
Answer 1 Computation of predetermined overhead rate for each department Predetermined overhead rate of department = Variable manufacturing Overhead rate + Fixed Manufacturing Overhead rate Predetermined overhead rate of Cutting department = $4 per machine hour + [$390000 / 50800 machine hours] = $4 + $7.68 = $11.68 per machine hour Predetermined overhead rate of Finishing department = $3.75 per direct labour hour + [$447000 / 86000 direct labour hours] = $3.75 + $5.20 = $8.95 per direct labour hour Answer 2 Computation of total manufacturing cost assigned to Job 203 Cutting Finishing Total Cost Direct Materials $740 $360 $1,100 Direct Labour $80 $220 $300 Overheads assigned $0 - 83 machine hours * $11.68 $969 $969 - 11 direct labour hours * $8.95 $98 $98 Total Cost $1,789 $678 $2,468 Total Manufacturing cost assigned to Job 203 = $2,468
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.