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Dear Tutor, I solved on question 1 and 2. Please provide the information on question 3. Thanks, White Company has two departments, Cutting & Finishing.
Dear Tutor, I solved on question 1 and 2. Please provide the information on question 3. Thanks, White Company has two departments, Cutting & 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 cost. At the beginning of the year, the company made the following estimates: Department Cutting Finishing Direct labor hours 6,000 30,000 Machine hours 48,000 5,000 Manufacturing overhead cost $360,000 $486,000 Direct labor cost $50,000 $270,000 1. Compute the predetermined overhead rate to be used in each department. 2. Assume that the overhead rates that you computed in (1) are in effect. The job cost sheet for job 203, which was started and completed during the year showed the following: Department Cutting Finishing Direct labor hours 6 20 Machine hours 80 4 Materials requisitioned $500 $310 Direct labor cost 70 150 Compute the total overhead cost applied 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 overhead rate based on direct labor cost, rather than using department rates? Explain. No computations are necessary
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