Question
High Desert Pottery works makes a variety of pottery products that it sells to retailers. The company’s job-order costing system uses departmental predetermined overhead rates 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 12,000 /60,000
Machine-hours 70,000/ 8,000
Fixed manufacturing overhead cost $ 497,000/ $ 615,000
Variable manufacturing overhead per machine-hour $ 1.50/ 0
Variable manufacturing overhead per direct labor-hour 0/ $ 2.00
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 30/ 84
Machine-hours 110/ 20
Direct materials $ 770/ $ 1,332
Direct labor cost $ 525/ $ 1,470
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 50 units, what would be its unit product cost?
Department
Molding/ Painting
Direct labor-hours 12,000 /60,000
Machine-hours 70,000/ 8,000
Fixed manufacturing overhead cost $ 497,000/ $ 615,000
Variable manufacturing overhead per machine-hour $ 1.50/ 0
Variable manufacturing overhead per direct labor-hour 0/ $ 2.00
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 30/ 84
Machine-hours 110/ 20
Direct materials $ 770/ $ 1,332
Direct labor cost $ 525/ $ 1,470
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 50 units, what would be its unit product cost?
Answers
GPT-4o mini
To answer your queries, we will go through the calculations step by step.
### 1. Compute the predetermined overhead rates for the Molding Department and the Painting Department.
**Molding Department:**
- **Predetermined Overhead Rate (Molding)** = (Fixed Manufacturing Overhead + (Variable Manufacturing Overhead per Machine-Hour × Machine-Hours)) / Machine-Hours
- Fixed Manufacturing Overhead = $497,000
- Variable Manufacturing Overhead = $1.50 per Machine-Hour
- Estimated Machine-Hours = 70,000
Let's calculate the total estimated manufacturing overhead for the Molding Department:
\[
\text{Total Estimated Overhead (Molding)} = 497,000 + (1.50 \times 70,000) = 497,000 + 105,000 = 602,000
\]
Now, we can find the predetermined overhead rate:
\[
\text{Predetermined Overhead Rate (Molding)} = \frac{602,000}{70,000} = 8.60 \text{ per machine-hour}
\]
**Painting Department:**
- **Predetermined Overhead Rate (Painting)** = (Fixed Manufacturing Overhead + (Variable Manufacturing Overhead per Direct Labor-Hour × Direct Labor-Hours)) / Direct Labor-Hours
- Fixed Manufacturing Overhead = $615,000
- Variable Manufacturing Overhead = $2.00 per Direct Labor-Hour
- Estimated Direct Labor-Hours = 60,000
Let's calculate the total estimated manufacturing overhead for the Painting Department:
\[
\text{Total Estimated Overhead (Painting)} = 615,000 + (2.00 \times 60,000) = 615,000 + 120,000 = 735,000
\]
Now, we can find the predetermined overhead rate:
\[
\text{Predetermined Overhead Rate (Painting)} = \frac{735,000}{60,000} = 12.25 \text{ per direct labor-hour}
\]
### Summary of Predetermined Overhead Rates:
- Molding Department: **$8.60 per machine-hour**
- Painting Department: **$12.25 per direct labor-hour**
### 2. Compute the total overhead cost applied to Job 205.
**Molding Department:**
- Machine-Hours for Job 205 = 110
- Predetermined Overhead Rate (Molding) = $8.60
\[
\text{Overhead Applied (Molding)} = 110 \times 8.60 = 946
\]
**Painting Department:**
- Direct Labor-Hours for Job 205 = 84
- Predetermined Overhead Rate (Painting) = $12.25
\[
\text{Overhead Applied (Painting)} = 84 \times 12.25 = 1,030
\]
**Total Overhead Cost Applied to Job 205:**
\[
\text{Total Overhead Applied} = \text{Overhead Applied (Molding)} + \text{Overhead Applied (Painting)} = 946 + 1,030 = 1,976
\]
### 3-a. Compute the total manufacturing cost recorded for Job 205.
The total manufacturing cost includes:
- Direct Materials
- Direct Labor
- Total Overhead Applied
From the data we gathered:
- Direct Materials (Molding) = $770
- Direct Materials (Painting) = $1,332
- Direct Labor cost (Molding) = $525
- Direct Labor cost (Painting) = $1,470
- Total Overhead Applied = $1,976
Calculating total costs:
\[
\text{Total Direct Materials} = 770 + 1,332 = 2,102
\]
\[
\text{Total Direct Labor} = 525 + 1,470 = 1,995
\]
\[
\text{Total Manufacturing Cost} = \text{Total Direct Materials} + \text{Total Direct Labor} + \text{Total Overhead Applied}
\]
\[
\text{Total Manufacturing Cost} = 2,102 + 1,995 + 1,976 = 6,073
\]
### 3-b. If the job contained 50 units, what would be its unit product cost?
\[
\text{Unit Product Cost} = \frac{\text{Total Manufacturing Cost}}{\text{Number of Units}} = \frac{6,073}{50} = 121.46
\]
### Summary of Results:
1. Predetermined Overhead Rates:
- Molding Department: **$8.60 per machine-hour**
- Painting Department: **$12.25 per direct labor-hour**
2. Total Overhead Cost Applied to Job 205: **$1,976**
3-a. Total Manufacturing Cost for Job 205: **$6,073**
3-b. Unit Product Cost for Job 205: **$121.46**
### 1. Compute the predetermined overhead rates for the Molding Department and the Painting Department.
**Molding Department:**
- **Predetermined Overhead Rate (Molding)** = (Fixed Manufacturing Overhead + (Variable Manufacturing Overhead per Machine-Hour × Machine-Hours)) / Machine-Hours
- Fixed Manufacturing Overhead = $497,000
- Variable Manufacturing Overhead = $1.50 per Machine-Hour
- Estimated Machine-Hours = 70,000
Let's calculate the total estimated manufacturing overhead for the Molding Department:
\[
\text{Total Estimated Overhead (Molding)} = 497,000 + (1.50 \times 70,000) = 497,000 + 105,000 = 602,000
\]
Now, we can find the predetermined overhead rate:
\[
\text{Predetermined Overhead Rate (Molding)} = \frac{602,000}{70,000} = 8.60 \text{ per machine-hour}
\]
**Painting Department:**
- **Predetermined Overhead Rate (Painting)** = (Fixed Manufacturing Overhead + (Variable Manufacturing Overhead per Direct Labor-Hour × Direct Labor-Hours)) / Direct Labor-Hours
- Fixed Manufacturing Overhead = $615,000
- Variable Manufacturing Overhead = $2.00 per Direct Labor-Hour
- Estimated Direct Labor-Hours = 60,000
Let's calculate the total estimated manufacturing overhead for the Painting Department:
\[
\text{Total Estimated Overhead (Painting)} = 615,000 + (2.00 \times 60,000) = 615,000 + 120,000 = 735,000
\]
Now, we can find the predetermined overhead rate:
\[
\text{Predetermined Overhead Rate (Painting)} = \frac{735,000}{60,000} = 12.25 \text{ per direct labor-hour}
\]
### Summary of Predetermined Overhead Rates:
- Molding Department: **$8.60 per machine-hour**
- Painting Department: **$12.25 per direct labor-hour**
### 2. Compute the total overhead cost applied to Job 205.
**Molding Department:**
- Machine-Hours for Job 205 = 110
- Predetermined Overhead Rate (Molding) = $8.60
\[
\text{Overhead Applied (Molding)} = 110 \times 8.60 = 946
\]
**Painting Department:**
- Direct Labor-Hours for Job 205 = 84
- Predetermined Overhead Rate (Painting) = $12.25
\[
\text{Overhead Applied (Painting)} = 84 \times 12.25 = 1,030
\]
**Total Overhead Cost Applied to Job 205:**
\[
\text{Total Overhead Applied} = \text{Overhead Applied (Molding)} + \text{Overhead Applied (Painting)} = 946 + 1,030 = 1,976
\]
### 3-a. Compute the total manufacturing cost recorded for Job 205.
The total manufacturing cost includes:
- Direct Materials
- Direct Labor
- Total Overhead Applied
From the data we gathered:
- Direct Materials (Molding) = $770
- Direct Materials (Painting) = $1,332
- Direct Labor cost (Molding) = $525
- Direct Labor cost (Painting) = $1,470
- Total Overhead Applied = $1,976
Calculating total costs:
\[
\text{Total Direct Materials} = 770 + 1,332 = 2,102
\]
\[
\text{Total Direct Labor} = 525 + 1,470 = 1,995
\]
\[
\text{Total Manufacturing Cost} = \text{Total Direct Materials} + \text{Total Direct Labor} + \text{Total Overhead Applied}
\]
\[
\text{Total Manufacturing Cost} = 2,102 + 1,995 + 1,976 = 6,073
\]
### 3-b. If the job contained 50 units, what would be its unit product cost?
\[
\text{Unit Product Cost} = \frac{\text{Total Manufacturing Cost}}{\text{Number of Units}} = \frac{6,073}{50} = 121.46
\]
### Summary of Results:
1. Predetermined Overhead Rates:
- Molding Department: **$8.60 per machine-hour**
- Painting Department: **$12.25 per direct labor-hour**
2. Total Overhead Cost Applied to Job 205: **$1,976**
3-a. Total Manufacturing Cost for Job 205: **$6,073**
3-b. Unit Product Cost for Job 205: **$121.46**