High Desert Potteryworks makes a variety of pottery products that it sells to re

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 Department Direct labor-hours Machine-hours Fixed manufacturing overhead cost Variable manufacturing overhead per machine-houir Variable manufacturing overhead per direct labor-hour Molding Painting 39,000 51,800 86,000 36,000 $215,000 $492,100 $2.80 -$4.80 Job 205 was started on August 1 and completed on August 10. The company's cost records show the following information concerning the job Department MoldingPainting Direct labor-hours Machine-hours Direct materials Direct labor cost 131 72 $940 $1,280 710 $1,000 87 310

Explanation / Answer

1 Predetermined overhead rate Molding Department Fixed manufacturing overhead cost (215,000/86,000)= 2.5 Variable manufacturing overhead rate per machine hour 2.8 Predetermined overhead rate 5.3 per MH's Painting Department Fixed manufacturing overhead cost (492100/51800)= 9.5 Variable manufacturing overhead rate per machine hour 4.8 Predetermined overhead rate 14.3 per DLH 2) total overhead cost applied ot job 205 Molding painting total Molding (310*5.3) 1643 1643 Painting (131*14.3) 1873 1873 total 1643 1873 3516 total overhead cost applied to job 205    3516

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