Exercise 2-13 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:

	Department
	Cutting		Finishing
Direct labor-hours		9,000		75,000
Machine-hours		62,100		2,500
Total fixed manufacturing overhead cost	$	380,000	$	449,000
Variable manufacturing overhead per machine-hour	$	4.00
Variable manufacturing overhead per direct labor-hour			$	4.75

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			4				17
Machine-hours			85				3
Direct materials		$	750			$	360
Direct labor cost		$	88			$	374

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?

Department Cutting Finishing 9,000 62,100 $380,000 449,000 $4.00 Direct labor-hours 75,000 2,500 Machine-hours Total fixed manufacturing overhead cost Variable manufacturing overhead per machine-hour Variable manufacturing overhead per direct labor-hour $ 4.75 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 17 Machine-hours 85 Direct materials $750 $ 88 $360 $374 Direct labor cost 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? Complete the question by entering your answers in the tabs given below Required1Required 2 Required 3 Compute the predetermined overhead rate for each department. (Round your answers to 2 decimal places.)