2. Compute the total overhead cost applied to Job 205. **PROBLEM 2–19 Multiple Predetermined Overhead Rates; Applying Overhead**High Desert Potteryworks, a company producing various pottery products for retailers, uses a job-order costing system where departmental predetermined overhead rates apply manufacturing overhead costs to jobs. The Molding Department's rate is based on machine-hours, while the Painting Department's rate relies on direct labor-hours. At the beginning of the year, costing estimates for each department were provided:| Department | Molding | Painting ||-------------|------------------|----------------|| Direct labor-hours | 12,000 | 60,000 || Machine-hours | 70,000 | 8,000 || Fixed manufacturing overhead cost | $497,000 | $615,000 || Variable manufacturing overhead per machine-hour | $1.50 | - || Variable manufacturing overhead per direct labor-hour | - | $2.00 |**Job 205 Information:**- Started: August 1- Completed: August 10- Department Costs (Job 205):| Department | Molding | Painting ||-------------|---------|----------|| Direct labor-hours | 30 | 84 || Machine-hours | 110 | 20 || Direct materials | $770 | $1,332 || Direct labor cost | $525 | $1,470 |**Requirements:**1. Compute the predetermined overhead rates used in the Molding Department and the Painting Department.2. Compute the total overhead cost applied to Job 205.

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Business

Accounting

2. Compute the total overhead cost applied to Job 205.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Manufacturing Costs

Manufacturing cost is the total cost of procuring or producing a product. In other words, the manufacturing cost is the cost that an individual or business owner undertakes for the manufacturing of goods.

Question

2. Compute the total overhead cost applied to Job 205.

**PROBLEM 2–19 Multiple Predetermined Overhead Rates; Applying Overhead**

High Desert Potteryworks, a company producing various pottery products for retailers, uses a job-order costing system where departmental predetermined overhead rates apply manufacturing overhead costs to jobs. The Molding Department's rate is based on machine-hours, while the Painting Department's rate relies on direct labor-hours. At the beginning of the year, costing estimates for each department were provided:

| Department | Molding | Painting |
|-------------|------------------|----------------|
| Direct labor-hours | 12,000 | 60,000 |
| Machine-hours | 70,000 | 8,000 |
| Fixed manufacturing overhead cost | $497,000 | $615,000 |
| Variable manufacturing overhead per machine-hour | $1.50 | - |
| Variable manufacturing overhead per direct labor-hour | - | $2.00 |

**Job 205 Information:**
- Started: August 1
- Completed: August 10
- Department Costs (Job 205):

| Department | Molding | Painting |
|-------------|---------|----------|
| Direct labor-hours | 30 | 84 |
| Machine-hours | 110 | 20 |
| Direct materials | $770 | $1,332 |
| Direct labor cost | $525 | $1,470 |

**Requirements:**
1. Compute the predetermined overhead rates used in the Molding Department and the Painting Department.
2. Compute the total overhead cost applied to Job 205.

Definition Definition Indirect costs incurred while producing goods or services. Overhead costs cannot be directly attributed to products or services. Overhead includes indirect material cost, indirect labor cost, rent, utilities expenses, and depreciation. Since these costs directly affect the profitability of a company, managing overhead becomes an important task for management.

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