In: Accounting
High Desert Potteryworks makes a variety of pottery products
that it sells to retailers, such as Home Depot. The company uses a
job-order costing system in which predetermined overhead rates are
used to apply manufacturing overhead cost to jobs. The
predetermined overhead rate in the Moulding Department is based on
machine-hours, and the rate in the Painting Department is based on
direct labour cost. At the beginning of the year, the company’s
management made the following estimates:
Department | ||||||
Molding | Painting | |||||
Direct labour-hours | 16,250 | 68,500 | ||||
Machine-hours | 87,000 | 9,700 | ||||
Direct materials cost | $ | 527,000 | $ | 667,000 | ||
Direct labour cost | $ | 162,500 | $ | 479,500 | ||
Manufacturing overhead cost | $ | 896,100 | $ | 815,150 | ||
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 | ||||||
Moulding | Painting | |||||
Direct labour-hours | 35 | 150 | ||||
Machine-hours | 160 | 25 | ||||
Materials placed into production | $ | 460 | $ | 322 | ||
Direct labour cost | $ | 280 | $ | 670 | ||
Required:
1. Compute the predetermined overhead rate used during the year in the Moulding Department. Compute the rate used in the Painting Department. (Round "Cost per machine-hour" answer to 2 decimal places.)
predetermined overhead rate | |
Molding department | _______ per machine hour |
Painting department | _______ % of direct labour |
2. Compute the total overhead cost applied to Job
205. (Do not round intermediate calculations. Enter your
answer rounded to the nearest whole dollar.)
Total overhead cost=
3-a. What would be the total cost recorded for Job
205? (Do not round intermediate calculations. Enter your
answers rounded to the nearest whole dollar.)
3-b. If the job contained 70 units, what would be
the cost per unit? (Do not round intermediate calculations
and round your final answer to 2 decimal
places.)
Cost per unit=
4. At the end of the year, the records of High
Desert Potteryworks revealed the following actual cost and
operating data for all jobs worked on during the year:
Department | ||||||
Moulding | Painting | |||||
Direct labour-hours | 11,700 | 63,700 | ||||
Machine-hours | 66,700 | 10,700 | ||||
Direct materials cost | $ | 447,000 | $ | 697,000 | ||
Direct labour cost | $ | 125,000 | $ | 453,000 | ||
Manufacturing overhead cost | $ | 699,710 | $ | 753,500 | ||
What was the amount of under- or overapplied overhead in each
department at the end of the year? (Do not round
intermediate calculations.)
molding department:
Painting department: