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Tinkle-Tinkle Glass Company makes glass globe paper weights for desks. The company uses a job-order cost...


Tinkle-Tinkle Glass Company makes glass globe paper weights for desks. The company uses a job-order cost system and predetermined overhead rates to apply manufacturing overhead cost to jobs. The predetermined overhead rate in the Fabrication Department is based on machine hours, and the rate in the Finishing Department is based on direct labor hours. At the beginning of the year, the company’s management made the following estimates for the year:

                                                                                                            Department

                                                                                                Fabrication       Finishing

Machine hours                                                                         83,000            28,000

Direct labor hours                                                                     30,000            43,000

Direct material cost                                                                 $412,000            $213,000

Direct labor cost                                                                      $299,000            $692,000

Fixed manufacturing overhead cost                                            $799,000           $279,000

Variable manufacturing overhead per machine hour                       $2.05                    --

Variable manufacturing overhead per direct labor hour                       --                  $2.00

Job 25 (the Christmas holiday special) was started on August 1 and completed on August 31. The company’s cost records show the following information concerning the job:

                                                                                                            Department     

                                                                                                Fabrication       Finishing

Machine hours                                                                                  315                   80

Direct labor hours                                                                              105                 125

Direct materials cost                                                                      $1,305          $1,030

Direct labor cost                                                                                $880              1,085

Compute the predetermined overhead rate used during the year in the Fabrication Department. (Round to two decimal places.) Do the same for the Finishing Department. (Round to two decimal places.) Be careful to use the proper cost driver.

Compute the total overhead cost applied to Job 25 (in dollars and cents).

What would be the total cost recorded for Job 25? If Job 25 contained 50 units, what would be the unit product cost? If it contained 800 units, what would be the unit product cost? (Round to two decimal places.)

At the end of the year, the records of Tinkle-Tinkle Glass revealed the following actual cost and

operating data for all jobs during the year:

                                                                                                            Department

                                                                                                Fabrication       Finishing

Machines hours                                                                           87,000               31,000

Direct labor hours                                                                        32,000               30,000

Direct materials cost                                                                 $424,000           $160,000

Manufacturing overhead cost                                                    $712,000           $287,000         

What was the amount of actual overhead in each department at the end of the year? Was it underapplied or overapplied? (You should have a total of four answers for this question.)

Solutions

Expert Solution

1) Compute the predetermined overhead rate used during the year in the Fabrication Department. (Round to two decimal places.) Do the same for the Finishing Department. (Round to two decimal places.) Be careful to use the proper cost driver.

Fabricating department = 799000/83000+2.05 = $11.68 per machine hour

Finishing department = 279000/43000+2 = $8.49 per labour hour

2) Compute the total overhead cost applied to Job 25 (in dollars and cents).

Overhead applied = 315*11.68+125*8.49 = 4740.45

3) What would be the total cost recorded for Job 25? If Job 25 contained 50 units, what would be the unit product cost? If it contained 800 units, what would be the unit product cost? (Round to two decimal places.)

Total Job Cost = 1305+1030+880+1085+4740.45 = 9040.45

Unit Cost at 50 Units = 9040.45/50 = $180.81 per unit

Unit Cost at 800 Units = 9040.45/800 = $11.30 per unit

4) What was the amount of actual overhead in each department at the end of the year? Was it underapplied or overapplied? (You should have a total of four answers for this question.)

Actual overhead fabrication = 712000

Actual overhead finishing = 287000

Fabrication = (87000*11.68)-712000 = 304160 Overapplied

Finishing = (30000*8.49)-287000 = 32300 Underapplied

ekkarill92 answered 2 years ago
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