High Desert Potteryworks makes a variety of pottery products that it sells to re
ID: 2332646 • Letter: H
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 310Explanation / Answer
Answers
Working
Molding
Painting
A
Fixed manufacturing Overhead
$ 215,000.00
$ 492,100.00
Allocation base
machine hours
direct labor hours
B
No. of hours
86,000
51,800
C = A/B
Fixed overhead rate per hour
$ 2.50
$ 9.50
D
Variable manufacturing overhead per hour
$ 2.80
$ 4.80
E = C+D
Predetermined overhead rate per hour
$ 5.30 per MH
$ 14.30 per DLH
Molding
Painting
Total
Direct Materials
$ 940
$ 1,280
$ 2,220
Direct Labor
$ 710
$ 1,000
$ 1,710
Manufacturing Overhead
$ 1,643 [310 MH x $ 5.30]
$ 1,873 [131 DLH x $ 14.30]
$ 3,516
Total cost
$ 3,293
$ 4,153
$ 7,446
A
Total cost for Job
$ 7,446
B
No. of units
22
C = A/B
Unit Product Cost
$ 338.45
Working
Molding
Painting
A
Fixed manufacturing Overhead
$ 215,000.00
$ 492,100.00
Allocation base
machine hours
direct labor hours
B
No. of hours
86,000
51,800
C = A/B
Fixed overhead rate per hour
$ 2.50
$ 9.50
D
Variable manufacturing overhead per hour
$ 2.80
$ 4.80
E = C+D
Predetermined overhead rate per hour
$ 5.30 per MH
$ 14.30 per DLH
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