Question
Problem 2-24A Multiple Departments; Applying Overhead [LO2-1, LO2-2, LO2-3, LO2-7] High Desert Potteryworks makes a variety of pottery products that it sells to retailers such
Problem 2-24A Multiple Departments; Applying Overhead [LO2-1, LO2-2, LO2-3, LO2-7]
High Desert Potteryworks makes a variety of pottery products that it sells to retailers such as Home Depot. The company uses a job-order costing system in which predetermined overhead rates are used to apply manufacturing overhead cost to jobs. The predetermined overhead rate in the Molding Department is based on machine-hours, and the rate in the Painting Department is based on direct labor-hours. At the beginning of the year, the company's management made the following estimates: |
Department | ||
Molding | Painting | |
Direct labor-hours | 39,000 | 59,100 |
Machine-hours | 86,000 | 31,000 |
Direct materials cost | $195,000 | $205,000 |
Direct labor cost | $277,000 | $515,000 |
Fixed manufacturing overhead cost | $206,400 | $561,450 |
Variable manufacturing overhead per machine-hour | $2.40 | - |
Variable manufacturing overhead per direct labor-hour | - | $4.40 |
Job 205 was started on August 1 and completed on August 10. The company's cost records show the following information concerning the job: |
Department | ||
Molding | Painting | |
Direct labor-hours | 83 | 126 |
Machine-hours | 300 | 68 |
Materials placed into production | $934 | $1,280 |
Direct labor cost | $740 | $1,010 |
Required: |
1. | Compute the predetermined overhead rate used during the year in the Molding Department. Compute the rate used in the Painting Department. (Round your answers to 2 decimal places.) |
2. | Compute the total overhead cost applied to Job 205. (Round "Predetermined overhead rate" to 2 decimal places, other intermediate calculations and final answers to the nearest dollar amount.) |
3-a. | What would be the total cost recorded for Job 205? (Round "Predetermined overhead rate" to 2 decimal places, other intermediate calculations and final answers to the nearest dollar amount.) |
3-b. | If the job contained 27 units, what would be the unit product cost? (Round "Predetermined overhead rate" and final answer to 2 decimal places and other intermediate calculations to the nearest dollar amount.) |
4. | At the end of the year, the records of High Desert Potteryworks revealed the following actual cost and operating data for all jobs worked on during the year: |
Department | ||
Molding | Painting | |
Direct labor-hours | 31,000 | 55,000 |
Machine-hours | 85,700 | 23,900 |
Direct materials cost | $167,500 | $425,000 |
Direct labor cost | $108,000 | $436,000 |
Manufacturing overhead cost | $420,960 | $727,500 |
What was the amount of underapplied or overapplied overhead in each department at the end of the year? (Round "Predetermined overhead rate" to 2 decimal places, other intermediate calculations and final answers to the nearest dollar amount. Select "None" for no effect (i.e., zero variance).) | |
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