Question

In: Accounting

High Desert Potteryworks makes a variety of pottery products that it sells to retailers such as...

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
show the following information concerning the job:

    

   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.)

Predetermined overhead rate
Molding Department per MH
Painting Department per DLH

         

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.)

Total overhead cost

         

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.)

Department
Molding Painting Total
Direct materials $0
Direct labor 0
Manufacturing overhead 0
Total cost $0 $0 $0

         

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.)

Unit product 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
   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).)

Molding Department
Painting Department

         

Molding Department
Painting Department

Solutions

Expert Solution

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

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