Question
Exercise 2-13 (Algo) Departmental Predetermined Overhead Rates [LO2-1, LO2-2, LO2-4] White Company has two departments, Cutting and Finishing. The company uses a job-order costing
Exercise 2-13 (Algo) Departmental Predetermined Overhead Rates [LO2-1, LO2-2, LO2-4] 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: Direct labor-hours Machine-hours Total fixed manufacturing overhead cost Variable manufacturing overhead per machine-hour Variable manufacturing overhead per direct labor-hour Required: Department Cutting 6,700 61,900 Finishing 62,000 1,700 $ 370,000 $ 440,000 $ 3.00 $ 4.75 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: Direct labor-hours Machine-hours Department Cutting Finishing 4 16 81 3
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