Question

igh 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		38,000			53,300
Machine-hours		80,000			32,000
Fixed manufacturing overhead cost	$	216,000		$	533,000
Variable manufacturing overhead per machine-hour	$	2.20			-
Variable manufacturing overhead per direct labor-hour		-		$	4.20

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		90			127
Machine-hours		380			68
Direct materials	$	934		$	1,140
Direct labor cost	$	710		$	1,000

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 30 units, what would be the unit product cost?

Answer 1

Answer 1.
	Molding	Painting
Estimated Fixed Overhead	216,000.00	533,000.00
Machine Hours	80,000.00
Labour hours		53,300.00
Predetermined Overehad Rate - Fixed MOH - Molding = $216,000 (Estimated Overhead) / 80,000 Mach. Hrs (Allocation Base)
Predetermined Overehad Rate - Fixed MOH - Molding = $2.70 per Mach Hrs
Total Predetermined Overhead Rate - Molding = $2.70 per Mach hr (Fixed )+ $2.20 (Variable)
Total Predetermined Overhead Rate - Molding = $4.90 per Mach hr
Predetermined Overehad Rate - Fixed MOH - Painting = $533,000 (Estimated Overhead) / 53,300 Lab. Hrs (Allocation Base)
Predetermined Overehad Rate - Fixed MOH - Painting = $10.00 per DLH
Total Predetermined Overhead Rate - Painting = $10.00 per DLH (Fixed )+ $4.20 (Variable)
Total Predetermined Overhead Rate - Painting = $14.20 per DLH
Answer 2.
Overhead Applied to Job 205
Molding - 380 Mach hrs X $4.90	1,862.00
Painting - 127 DLH x $14.20	1,803.40
Total Overhead Applied	3,665.40
Answer 3.
	Molding	Painting	Total
Direct Material	934.00	1,140.00	2,074.00
Direct Labor	710.00	1,000.00	1,710.00
Overhead Applied	1,862.00	1,803.40	3,665.40
Total Manufacturing Costs			7,449.40
Answer 4.
Total Manufacturing Costs	7,449.40
No. of Units - Job 205	30
Unit Product Cost	248.31