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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
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 nanufacturing overhead cost Variable nanufacturing overhead per nachine-hour Variable nanufacturing overhead per direct labor-hour Required: 1. Compute the predetermined overhead rate for each department Departaent Cutting Finishing 8.400 59,600 $390,000 82,000 1,400 $470,000 $ 2.00 0 $3,75 2. The job cost sheet for Job 203, which was started and completed during the year, showed the following: Direct labor-hours Machine-hours Direct materials Department Cutting Finishing 3 12 89 5 $790 $ 54 $390 $ 216 Direct labor cost Using the predetermined overhead rates that you computed in requirement (1), 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 predetermined overhead rate based on direct labor-hours, rather than using departmental rates? Complete the question by entering your answers in the tabs given below. Required 1 Required 2 Required 31 Compute the predetermined overhead rate for each department. (Round your answers to 2 decimal places.) Predetermined overhead rate Cutting Department per MH Finishing Department per DLH Using the predetermined overhead rates that you computed in requirement (1), compute the total manufacturing cost assigne 203. 3. Would you expect substantially different amounts of overhead cost to be assigned to some jobs if the company used a plan predetermined overhead rate based on direct labor-hours, rather than using departmental rates? Complete the question by entering your answers in the tabs given below. Required 11 Required 2 Required 3 Using the predetermined overhead rates that you computed in requirement (1), compute the total manufacturing cost assigned to Job 203, (Round your intermediate calculations and final answer to 2 decimal places.) Total manufacturing cost < Required 1 Required 3 > Complete the question by entering your answers in the tabs given below. Required 1 Required 2 Required 3 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? Yes No
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