Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

EXERCISE 3-15 Departmental Overhead Rates (L03-1, L03-2, LO3-3] White Company has two departments, Cutting and Finishing. The company uses a job-order costing system and computes

image text in transcribed

EXERCISE 3-15 Departmental Overhead Rates (L03-1, L03-2, LO3-3] 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: Direct labor-hours ..... Machine-hours .......... .......... . Total fixed manufacturing overhead cost ........... Variable manufacturing overhead per machine-hour ....... Variable manufacturing overhead per direct labor-hour ..... Department Cutting Finishing 6,000 30,000 48,000 5,000 $264,000 $366,000 $2.00 $4.00 Required: 1. Compute the predetermined overhead rate to be used in each department. 2. Assume that the overhead rates that 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 20 Direct labor-hours .......... Machine-hours ...... Materials requisitioned ....... Direct labor cost ...... 6 80 $500 $70 $310 $150 ............. 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 overhead rate based on direct labor-hours, rather than using departmental rates? Explain. No computations are necessary

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

A History Of Accountancy In The United States

Authors: Gary John Previts, Barbara Dubis Merino

98th Edition

0814207286, 978-0814207284

More Books

Students also viewed these Accounting questions

Question

What are the benefits of making a to-do list? (p. 299)

Answered: 1 week ago