White Company has two departments, Cutting and Finishing. The company uses a job
ID: 2738350 • Letter: W
Question
White Company has two departments, Cutting and Finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each department The Cutting Department bases its rate on machine-hours. and the Finishing Department bases its rate on direct labor-hours. At the beginning of the year, the company made the following estimates: Compute the predetermined overhead rate to be used in each department (Round your answers to 2 decimal places.) Assume that the overhead rates you computed in (1) above are in effect The job cost sheet for Job 203. which was started and completed during the year, showed the following: Compute the total manufacturing cost assigned to Job 203. (Round your intermediate and final answers to 2 decimal places.)Explanation / Answer
1)
Predetermined overhead rate of Cutting department = Total Manufacturing overhead / machine hours = 390000/68400 = 5.70175 per machine hour.
Predetermined overhead rate of Finishing department = Total Manufacturing overhead / Direct labor hours =
=456000/64000 = 7.125 per direct labor bour.
2)
Manufacturing cost assigned to JOb 233 is :
Cutting = NUmber of machine hours for the job * Pre-determined overhead rate = 84 hours * 5.70175 = $478.94.
Finishing= NUmber of Direct labor hours for the job * Pre-determined overhead rate = 18 hours * 7.125 = $128.25.
Total Manufacturing cost ot the job 233 is $478.94+128.25 = $607.1974.
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