Item$2$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:

Required:

Compute the predetermined overhead rate for each department.

The job cost sheet for Job $203,$ which was started and completed during the year, showed the following:

Using the predetermined overhead rates that you computed in requirement $(1),$ compute the total manufacturing cost assigned to

Job $203.$

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?

$10$

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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 $7,20086,000$

Machine$-$hours $54,9001,300$

Total fixed manufacturing overhead cost $ $380,000$ $ $597,000$

Variable manufacturing overhead per machine$-$hour $ $4\mathrm{.}000$

Variable manufacturing overhead per direct labor$-$hour $0$ $$3\mathrm{.}75$

Required:

Compute the predetermined overhead rate for each department.

The job cost sheet for Job $203,$ which was started and completed during the year, showed the following:

Department

Cutting Finishing

Direct labor$-$hours $615$

Machine$-$hours $846$

Direct materials $ $730$ $ $370$

Direct labor cost $ $144$ $ $360$

Using the predetermined overhead rates that you computed in requirement $(1),$ compute the total manufacturing cost assigned to Job $203.$

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?