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 labour cost. At the beginning
of the year, the company made the following estimates:
| Department | ||||||
| Cutting | Finishing | |||||
| Direct labour-hours | 6,500 | 34,500 | ||||
| Machine-hours | 48,750 | 4,500 | ||||
| Manufacturing overhead cost | $ | 487,500 | $ | 553,500 | ||
| Direct labour cost | $ | 65,000 | $ | 307,500 | ||
Required:
1. Compute the predetermined overhead rate to be used in each
department. (Round your answers to 2 decimal
places.)
|
||||||||||||||||
2. Assume that the overhead rates that you
computed in Requirement (1) are in effect. The job cost sheet for
job 203, which was started and completed during the year, showed
the following:
| Department | ||||||
| Cutting | Finishing | |||||
| Direct labour-hours | 8 | 25 | ||||
| Machine-hours | 75 | 5 | ||||
| Materials requisitioned | $ | 540 | $ | 350 | ||
| Direct labour cost | $ | 88 | $ | 165 | ||
Compute the total overhead cost applied to job 203. (Do not
round intermediate calculations and round your answer to 2 decimal
places.)
- Total overhead cost applied:
3. Would you expect substantially different
amounts of overhead cost to be assigned to some jobs if the company
used a plantwide overhead rate based on direct labour cost, rather
than using departmental rates?
Yes
No
| 1. Computation of Predetermined Overhead Rate | ||
| Particular | Cutting Department | Finishing Department |
| Overhead Cost (A) | $487,500.00 | $553,500.00 |
| Direct Labor Cost (B) | 307500 | |
| Machine Hours (B) | 48750 | |
| Predetermined Overhead Rate (A/B) | $10.00 | 180% |
| 2. Computation of amoiunt of Overhead Applied to job-203 | ||
| Cutting Department | Finishing Department | |
| Driver (a) | 75 | 165 |
| Predetrmined Overhead Rate (as Calculated above) (b) | $10.00 | 180% |
| Applied Overhead cost (aXb) | $750.00 | $297.00 |
Part-3
Yes
working for your refrence
| Plant Wide Overhead Rate = Estimated overhead / Estimated Direct labour Cost |
| =(487500+553500)/(65000+307500)=279.46% |
| Applied Overhead on Job 306 as per Plant wide overhead Rate = (88+165)*279.46%=$707 |
| Applied Overhead on Job 306 as per Departmental overhead Rate = (750+297)=$1047 |
Get Answers For Free
Most questions answered within 1 hours.