Question

Problem 2-19 Multiple Predetermined Overhead Rates; Applying Overhead [LO2-1, LO2-2, LO2-4]

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
	Molding			Painting
Direct labor-hours		35,000			53,900
Machine-hours		89,000			38,000
Fixed manufacturing overhead cost	$	275,900		$	501,270
Variable manufacturing overhead per machine-hour	$	2.40			-
Variable manufacturing overhead per direct labor-hour		-		$	4.40

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
	Molding			Painting
Direct labor-hours		86			128
Machine-hours		340			70
Direct materials	$	950		$	1,100
Direct labor cost	$	750		$	970

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 38 units, what would be the unit product cost?

Answer 1

1
Predetermined overhead rates
Molding Department	5.50	per MH	=2.40+(275900/89000)
Painting Department	13.70	per DLH	=4.40+(501270/53900)
2
Overhead applied:
Molding Department	1870		=340*5.50
Painting Department	1754		=128*13.70
Total overhead cost	3624
3a
	Molding	Painting	Total
Direct materials	950	1100	2050
Direct labor cost	750	970	1720
Manufacturing overhead	1870	1754	3624
Total cost	3570	3824	7394
3b
Unit product cost	194.58	=7394/38