Question
Lakeshore has two departments: cutting and finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each department. The
Lakeshore 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 labour cost. At the beginning of the year, the company made the following estimates: Department Direct labour-hours Cutting Finishing 6,400 34,400 Machine-hours 48,500 4,400 Manufacturing overhead cost $480,150 $ 64,000 $564,250 $305,000 Direct labour cost Required: 1. Compute the predetermined overhead rate to be used in each department. (Round your answers to 2 decimal places.) Predetermined overhead rate Department Cutting per MH Finishing % of DLC 2. Assume that the overhead rates that you computed in Requirement (1) are in effect. The job cost sheet for job 203, which was started and completed during the year, showed the following: Direct labour-hours Machine-hours Direct labour cost Materials requisitioned Department Cutting Finishing 6 20 90 4 $530 $340 $ 66 $164 Compute the total overhead cost applied to job 203. (Do not round intermediate calculation. Round your final answer to 2 decimal places.) < Prev 13 of 13 Next > Compute the total overhead cost applied to job 203. (Do not round intermediate calculation. Round your final answer to 2 decimal places.) Total overhead cost applied 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 labour cost, rather than using departmental rates? Yes No < Prev 13 of 13 Next
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