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:

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 32 units, what would be the unit product cost?

Department Molding Painting Direct labor-hours 39,500 59,700 Machine-hours 84,000 31,000 Fixed manufacturing overhead cost $ 193,200 $ 531,330 Variable manufacturing overhead per machine-hour $ 3.20 - Variable manufacturing overhead per direct labor-hour - $ 5.20

Explanation / Answer

1. Molding Dept :-

462000

Painting Dept :-

841770

2. Total OH Cost applied to Job 205

3 A

3B.

TOTAL MFG COST / NO OF UNITS = 7898.10 / 32 = 246.82 PER UNIT

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Estimated Fixed Mfg OH 193200 Estimated Var Mfg OH (3.2 x 84000) 268800 Total Mfg OH Cost

462000

Pre determined OH rate (462000 / 84000 ) 5.5

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