Question 3:

Mountain and River Aussie Limited has two departments Rock and Pebble. The company uses a job-order costing system. The company manufactures luxury boots for Australians to walk on their hands.

The company currently computes a predetermined overhead rate for the overall plantwide based on labour-hours.

The company is considering a change to compute predetermined overhead per each department. The Rock Department would base its rate on machine-hours and the Pebble Department bases its rate on direct labour-hours. At the beginning of the year, the company made the following estimates:

	Department
	Rock	Pebble
Direct labour-hours	2,000	45,000
Machine-hours	150,000	1,000
Total fixed manufacturing overhead cost	$45,000	$60,000
Variable manufacturing overhead per machine-hour	$12.00	$12.00
Variable manufacturing overhead per direct labour-hour	$4.00	$4.00

During the company complete Job #9999, which was started and completed during the year. The job sheet for Job #9999 is presented as follows:

	Department
	Rock	Pebble
Direct labour-hours	9	610
Machine-hours	210	18
Materials requisitioned	$12,200	$16,500
Direct labour costs	$15,500	$11,500

Required:

(1) Compute the cost of Job #9999 if pre-determined overhead is calculated based on a plantwide basis.

(2) Compute the cost of Job #9999 if pre-determined overhead is calculated based on a department basis.