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High Desert Potteryworks makes a variety of pottery products that it sells to retailers. The company...

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 30,500 57,900
Machine-hours 86,000 38,000
Fixed manufacturing overhead cost $ 275,200 $ 544,260
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 82 127
Machine-hours 320 70
Direct materials $ 940 $ 1,200
Direct labor cost $ 710 $ 980

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?

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Homework Answers

Answer #1

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

Molding Painting
Fixed manufacturing overhead 275200 544260
Hours 86000 57900
Predetermine overhead rate 3.20 per MH 9.40 per DLH

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

Molding = (3.20+2.40)*320 = 1792

Painting = (9.4+4.4)*127 = 1752.60

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

Direct material (940+1200) 2140
Direct labour (710+980) 1690
Overhead cost (1792+1752.60) 3544.60
Total manufacturing cost 7374.60

3-b. If the job contained 38 units, what would be the unit product cost?

Unit cost = 7374.60/38 = 194.07 per unit

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