White Company has two departments: cutting and finishing. The company uses a job-order costing system and computes

Question:

White Company has two departments: cutting and finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each department. The cutting department bases its rate on machine-hours, and the finishing department bases its rate on direct labour cost. At the beginning of the year, the company made the following estimates:

image

Required:

1. Compute the predetermined overhead rate to be used in each department.

2. Assume that the overhead rates that you computed in part (1) are in effect. The job cost sheet for job 203, which was started and completed during the year, showed the following:

image

3. Would you expect substantially different amounts of overhead cost to be assigned to some jobs if the company used a plantwide overhead rate based on direct labour cost, rather than using departmental rates? Explain your answer. No computations are necessary.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Managerial Accounting

ISBN: 9780072834949

11th Edition

Authors: Ray Garrison, Eric Noreen, Peter Brewer

Question Posted: