Compute the predetermined overhead rate used during the year

Reference no: EM131928199

Problem

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	56,500
Machine-hours	86,000	39,000
Direct materials cost	$190,000	$200,000
Direct labor cost	$273,000	$522,000
Fixed manufacturing overhead cost	$197,800	$474,600
Variable manufacturing overhead per machine-hour	$3.00	-
Variable manufacturing overhead per direct labor-hour	-	$5.00

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	81	127
Machine-hours	390	72
Materials placed into production	$944	$1,120
Direct labor cost	$700	$970

Required:

1. Compute the predetermined overhead rate used during the year in the Molding Department. Compute the rate used in the Painting Department.

2. Compute the total overhead cost applied to Job 205.

3-a. What would be the total cost recorded for Job 205?

3-b. If the job contained 37 units, what would be the unit product cost?

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	28,000	58,000
Machine-hours	85,700	24,700
Direct materials cost	$161,500	$415,000
Direct labor cost	$108,000	$436,000
Manufacturing overhead cost	$464,310	$740,800

What was the amount of underapplied or overapplied overhead in each department at the end of the year?

Reference no: EM131928199

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