PROBLEM 5-23 Multiple Departments; Applying Overhead High Desert Potteryworks ma
ID: 2434469 • Letter: P
Question
PROBLEM 5-23 Multiple Departments; Applying OverheadHigh Desert Potteryworks makes a variety of pottery products that it sells to retailers such as Home Depot. The company uses a job-order costing system in which 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 cost. At the beginning of the year, the company's management made the following estimates:
Molding Painting
Direct labor-hours . 12,000 60,000
Machine-hours . 70,000 8,000
Direct materials cost . 510,000 650,000
Direct labor cost . 130,000 420,000
Manufacturing overhead cost . 602,000 735,000
The following information pertains to Job 205, which was started on August 1 and completed on August 10.
Molding Painting
Direct labor-hours 30 85
Machine-hours 110 20
Materials placed into production $470 332
Direct labor cost $290 680
1. Compute' the predetermined overhead rate used during the year in the Molding Department. Compute
the rate used in the Painting Department.
2. Compute the total overhead cost applied to Job 205.
3. What would be the total cost recorded for Job 205? If the job contained 50 units, what would be the
unit product cost?
4. At the end of the year, the records of High Desert Potteryworks revealed the following actual cost and operating data for all jobs worked on during the year:
Molding Painting
Direct labor-hours .10,000 62,000
Machine-hours . 65,000 9,000
Direct materials cost .430,000 680,000
Direct labor cost . 108,000 436,000
Manufacturing overhead cost .570,000 750,000
What was the amount of underapplied or overapplied overhead in each department at the end of the year?
Explanation / Answer
a. Data given Molding Painting Estimated manufacturing overhead cost(A) 602000 735000 Machine hours(B) 70000 Direct labor hours( C ) 60000 predetermined manufacturing overheads= A/B A/C Estimated manufacturing overhead cost 8.6 12.25 Overhead applied to particular job Predetermined overheads(D) 8.6 12.25 Actual machine hours charged (F) 110 20 Overhead applied to particular job D×F D×F 946 245 b. Total overhead cost to job 205 Molding Painting Total Direct materials 470 332 802 Direct labor 290 680 970 Manufacturing oveheads 946 245 Cost of production 1706 1257 c. 1191 Cost of production(G) 2963 2963 Number of units produced(H) 50 Cost per unit of production G/H Cost per unit of production 59.26 d. Actual manufacturing overheads 570000 750000 Manufacturing over heads applied to work in progress 559000 759500 11000 -9500 Manufacturing overheads applied to work progress I×J I×H Predetermined overhead rate(I) 8.6 12.25 Actual machine hours(J) 65000 Actual labor hours(H) 62000
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