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:

Job 205 was started on August 1 and completed on August 10. The company's cost records show the following information concerning the job:

Required: (SHOW ALL WORK)

1. Compute the predetermined overhead rates used in the Molding Department and the Painting Department.

2. Compute the total overhead cost applied to Job 205.

3-a. What would be the total manufacturing cost recorded for Job 205?

3-b. If the job contained 33 units, what would be the unit product cost?

Department Molding Painting Direct labor-hours 38,000 58,200 Machine-hours 82,000 30,000 Fixed manufacturing overhead cost $ 213,200 $ 517,980 Variable manufacturing overhead per machine-hour $ 2.60 - Variable manufacturing overhead per direct labor-hour - $ 4.60

Explanation / Answer

1) Molding department overhead rate = (213200/82000)+2.60 = $5.20 per machine hour

Painting department overhead rate = (517980/58200)+4.60 = $13.50 per labour hour

2) Total overhead cost applied to job 205 = (300*5.2+129*13.50) = $3301.50

3) Total manufacturing cost recorded for job 205

3b) Unit product cost = 7107.50/33 = $215.38 per unit

Direct material 2136 Direct labour 1670 Manufacturing overhead 3301.50 Total manufacturing cost 7107.50

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