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 36,000 57,800 Machine-hours 90,000 32,000 Fixed manufacturing overhead cost $ 288,000 $ 560,660 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 88 133 Machine-hours 340 74 Direct materials $ 944 $ 1,160 Direct labor cost $ 710 $ 990 Required: 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 34 units, what would be the unit product cost?

Answer 1

Answer 1.
	Molding	Painting
Direct Labor Hours	36,000	57,800
Machine Hours	90,000	32,000
Fixed Manufacturing Overhead	288,000	560,660
Predetermined Overhead Rate - Molding Department - Fixed MOH = $288,000 (Estimated Overhead) / 90,000 Mach Hrs
Predetermined Overhead Rate - Molding Department - Fixed MOH = $3.20 per mach. Hr.
Total Predetermined Overhead Rate - Molding Deptt. = $3.20 (Fixed Overhead) + $2.40 (Variable Overhead)
Total Predetermined Overhead Rate - Molding Deptt. = $5.60 per mach Hr.
Predetermined Overhead Rate - Painting Department - Fixed MOH = $560,660 (Estimated Overhead) / 57,800 Lab Hrs
Predetermined Overhead Rate - Painting Department - Fixed MOH = $9.70 per Lab. Hr.
Total Predetermined Overhead Rate - Painting Deptt. = $9.70 (Fixed Overhead) + $4.40 (Variable Overhead)
Total Predetermined Overhead Rate - Painting Deptt. = $14.10 per Lab. Hr.
Answer 2.
Total Overhead Applied to Job 205:
Molding Department - 340 Mach Hrs X $5.60	1,904.00
Painting Department - 133 Lab Hrs X $14.10	1,875.30
Total Overhead Applied	3,779.30
Answer 3-A.
	Molding	Painting	Total
Direct Material	944.00	1,160.00	2,104.00
Direct Labor	710.00	990.00	1,700.00
Overhead Applied	1,904.00	1,875.30	3,779.30
Total Cost - Job 205	3,558.00	4,025.30	7,583.30
Answer 3-B.
Total Manufacturing Cost - Job 205	7,583.30
No. of Unit	34
Cost per Unit	223.04