|https://newconnect.mheducation.com/flow/connect.html Geved ter 2 Homework #2 )
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|https://newconnect.mheducation.com/flow/connect.html Geved ter 2 Homework #2 ) Exercise 2-13 Departmental Predetermined Overhead Rates (LO2-1, LO2-2, L024) 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 Depertment 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 folliowing estimates: nts Department Cutting Finishing 6,508 79,800 65,90 3,5ee ebook Direct labor-hours Machine-hours Total fixed manufacturing overhead cost Variable manufacturing overhead per sachine-hour s 2.e8 Variable manufacturing overhead per direct labor- hour 368,808 $559,890 Ask 3.75 Print 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 References Departnent Cutting Finishing Direct labor-hours Machine-hours Direct naterials Direct labor cost 19 83 $740 $390 $ 60 $380 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 overheed rate based on direct labor-hours, rather than using departmental rates? Complete the question by entering your answers in the tabs given below 0 Type here to search 00Explanation / Answer
Answer to Requirement 1.
Cutting Department:
Predetermined Overhead Rate = Estimated Manufacturing Overhead / Estimated Machine Hours
Estimated Manufacturing Overhead = Fixed Manufacturing Overhead + Variable Manufacturing Overhead
Estimated Manufacturing Overhead = $360,000 + ($2.00 * 65,900)
Estimated Manufacturing Overhead = $491,800
Predetermined Overhead Rate = 491,800 / 65,900
Predetermined Overhead Rate = $7.46 per MH
Finishing Department:
Predetermined Overhead Rate = Estimated Manufacturing Overhead / Estimated Machine Hours
Estimated Manufacturing Overhead = Fixed Manufacturing Overhead + Variable Manufacturing Overhead
Estimated Manufacturing Overhead = $559,000 + ($3.75 * 79,000)
Estimated Manufacturing Overhead = $855,250
Predetermined Overhead Rate = 855,250 / 79,000
Predetermined Overhead Rate = $10.83 per DLH
Answer to Requirement 2.
Total Manufacturing Cost assigned to Job 203 = Total Manufacturing Cost assigned to Cutting Department + Total Manufacturing Cost assigned to Finishing Department
Total Manufacturing Cost assigned to Cutting Department = Direct Materials + Direct Labor + Manufacturing Overhead
Total Manufacturing Cost assigned to Cutting Department = $740 + $60 + ($7.46 * 83)
Total Manufacturing Cost assigned to Cutting Department = $740 + $60 + $619.18
Total Manufacturing Cost assigned to Cutting Department = $1,419.18
Total Manufacturing Cost assigned to Finishing Department = Direct Materials + Direct Labor + Manufacturing Overhead
Total Manufacturing Cost assigned to Finishing Department = $390 + $380 + ($10.83 * 19)
Total Manufacturing Cost assigned to Finishing Department = $390 + $380 + $205.77
Total Manufacturing Cost assigned to Finishing Department = $975.77
Total Manufacturing Cost assigned to Job 203 = $1,419.18 + $975.77
Total Manufacturing Cost assigned to Job 203 = $2,394.95
Answer to Requirement 3.
Yes, they will charged to lesser overhead cost if plantwide overhead rate based on direct labor hour is used.
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