Exercise 2-15 Departmental Overhead Rates [LO2-1, LO2-2, LO2-3]

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		8,000		89,000
Machine-hours		56,300		1,300
Total fixed manufacturing overhead cost	$	400,000	$	431,000
Variable manufacturing overhead per machine-hour	$	4.00		-
Variable manufacturing overhead per direct labor-hour		-	$	3.75

Required:
1.	Compute the predetermined overhead rate to be used in each department. (Round your answers to 2 decimal places.)

	Department
	Cutting		Finishing
Predetermined overhead rate		per MH		per DLH
	sheet is drawn here

2.	Assume that the overhead rates you computed in (1) above 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		5		16
Machine-hours		89		3
Materials requisitioned	$	800	$	370
Direct labor cost	$	36	$	160

Compute the total manufacturing cost assigned to Job 203. (Round your intermediate and final answers to 2 decimal places.)

Total manufacturing cost

3.

Would you expect substantially different amounts of overhead cost to be assigned to some jobs if the company used a plant wide overhead rate based on direct labor-hours, rather than using departmental rates?

	No
	Yes