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:

	Department
	Molding			Painting
Direct labor-hours		38,000			58,200
Machine-hours		82,000			30,000
Fixed manufacturing overhead cost	$	213,200		$	517,980
Variable manufacturing overhead per machine-hour	$	2.60			-
Variable manufacturing overhead per direct labor-hour		-		$	4.60

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		79			129
Machine-hours		300			67
Direct materials	$	936		$	1,200
Direct labor cost	$	700		$	970

Required: (SHOW ALL WORK)

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 33 units, what would be the unit product cost?

Answer 1

1) Molding department overhead rate = (213200/82000)+2.60 = $5.20 per machine hour

Painting department overhead rate = (517980/58200)+4.60 = $13.50 per labour hour

2) Total overhead cost applied to job 205 = (300*5.2+129*13.50) = $3301.50

3) Total manufacturing cost recorded for job 205

Direct material	2136
Direct labour	1670
Manufacturing overhead	3301.50
Total manufacturing cost	7107.50

3b) Unit product cost = 7107.50/33 = $215.38 per unit