Required: 1. Compute the predetermined overhead rate for each department. 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 Direct labor cost Department Cutting Finishing 5 80 13 6 $ 360 $ 325 $ 730 $ 125 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?
Required: 1. Compute the predetermined overhead rate for each department. 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 Direct labor cost Department Cutting Finishing 5 80 13 6 $ 360 $ 325 $ 730 $ 125 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?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text: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 manufacturing overhead cost
Variable manufacturing overhead per machine-hour
Variable manufacturing overhead per direct labor-hour
Required:
1. Compute the predetermined overhead rate for each department.
Department
Cutting
Finishing
6,900
55,300
$ 360,000
73,000
1,700
$520,000
$ 2.00
0
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
Direct labor cost
Department
Cutting
Finishing
5
13
80
6
$ 730
$ 125
$ 360
$ 325
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?
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