1,2&3

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 labor-hours. At the beginning of the year, the company made the following estimates: Department Cutting Finishing Direct labor-hours 7,900 87,000 Machine-hours 58,300 2,800 Total fixed manufacturing over head cost $ 370,000 $ 524,000 Variable manufacturing overhead per machine-hour $ 3.00 Variable manufacturing overhead per direct labor-hour $ 3.75 Required: 1. Compute the predetermined overhead rate for each department. 2. The job cost sheet for Job 203, which was started and completed during the year, showed the following: Department Cutting Finishing Direct labor-hours Machine-hours Direct materials $ 370 Direct labor cost $ 100 $ 280 Using the predetermined overhead rates that you computed in requirement (1), compute the total manufacturing cost assigned to Job 203 3. Would you expect substantially different amounts of overhead cost to be assigned to some jobs if the company used a plantwide predetermined overhead rate based on direct labor hours, rather than using departmental rates? 14 5 86 $ 800 4