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 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's management made the following estimates: |
Department | ||
Molding | Painting | |
Direct labor-hours | 33,500 | 58,600 |
Machine-hours | 82,000 | 38,000 |
Direct materials cost | $193,000 | $203,000 |
Direct labor cost | $280,000 | $514,000 |
Fixed manufacturing overhead cost | $205,000 | $580,140 |
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 |
Department | ||
Molding | Painting | |
Direct labor-hours | 74 | 127 |
Machine-hours | 380 | 71 |
Materials placed into production | $950 | $1,180 |
Direct labor cost | $700 | $950 |
Required: |
1. |
Compute the predetermined overhead rate used during the year in the Molding Department. Compute the rate used in the Painting Department. (Round your answers to 2 decimal places.) |
||||||||||||
|
2. |
Compute the total overhead cost applied to Job 205. (Round "Predetermined overhead rate" to 2 decimal places, other intermediate calculations and final answers to the nearest dollar amount.) |
|
3-a. |
What would be the total cost recorded for Job 205? (Round "Predetermined overhead rate" to 2 decimal places, other intermediate calculations and final answers to the nearest dollar amount.) |
|||||||||||||||||||||||||||
|
3-b. |
If the job contained 34 units, what would be the unit product cost? (Round "Predetermined overhead rate" and final answer to 2 decimal places and other intermediate calculations to the nearest dollar amount.) |
||||||
|
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 | ||
Molding | Painting | |
Direct labor-hours | 29,000 | 58,000 |
Machine-hours | 81,700 | 23,500 |
Direct materials cost | $162,900 | $424,000 |
Direct labor cost | $108,000 | $436,000 |
Manufacturing overhead cost | $411,230 | $792,300 |
What was the amount of underapplied or overapplied overhead in each department at the end of the year? (Round "Predetermined overhead rate" to 2 decimal places, other intermediate calculations and final answers to the nearest dollar amount. Select "None" for no effect (i.e., zero variance).) |
|
|
|
1) | Predetermined overhead rate | |||
Molding Department = (205000/82000)+2.40 = | $ 4.90 | per MH | ||
Painting Department = (580140/58600)+4.40 = | $ 14.30 | per DLH | ||
2) | Total overhead cost applied to Job 205 = 380*4.9+127*14.30 = | $ 3,678 | ||
3-a. | Total cost recorded for Job 205: | |||
Department | ||||
Molding | Painting | Total | ||
Direct materials | 950 | 1180 | 2130 | |
Direct labor | 700 | 950 | 1650 | |
Manufacturing overhead | 1862 | 1816 | 3678 | |
Total cost | $3,512 | $3,946 | $7,458 | |
3-b) | Unit product cost = 7458/34 = | $ 219 | ||
4) | Molding | Painting | ||
Overhead applied: | ||||
81700*4.90 = | 400330 | |||
58000*14.30 = | 829400 | |||
Actual overhead | 411230 | 792300 | ||
Underapplied overhead | 10900 | |||
Overapplied overhead | 37100 | |||
Molding Department | 10900 | Underapplied | ||
Painting Department | 37100 | Overapplied |