White Company has two departments, Cutting and Finishing The company uses a job-order costing system and computes a predetermined overhead rete 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: Department Cutting , 300 68,100 $310,000 $2.00 Finishing 86,000 1,500 $ 411,000 Direct labor-hours Machine-houEN Total fixed manutacturing overhead cost Variable manufacturing overhead per naehine-hour Variable manutacturing overhead per direct labor-hour Provm $ 3.75 rences Required: 1. Compute the predetermined overhoad rate for each department. 2. The job cost sheet for Job 203, which was started and completed during the year, showed the following: Departnent Cutting Piniahing Direct labor-hours Hachine-hours Direct materials Direet labor esst 14 20 85 $ 790 $360 Using the predetermined overhead rates that you computed in requirement (1), compute the total manufecturing 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.
White Company has two departments, Cutting and Finishing The company uses a job-order costing system and computes a predetermined overhead rete 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: Department Cutting , 300 68,100 $310,000 $2.00 Finishing 86,000 1,500 $ 411,000 Direct labor-hours Machine-houEN Total fixed manutacturing overhead cost Variable manufacturing overhead per naehine-hour Variable manutacturing overhead per direct labor-hour Provm $ 3.75 rences Required: 1. Compute the predetermined overhoad rate for each department. 2. The job cost sheet for Job 203, which was started and completed during the year, showed the following: Departnent Cutting Piniahing Direct labor-hours Hachine-hours Direct materials Direet labor esst 14 20 85 $ 790 $360 Using the predetermined overhead rates that you computed in requirement (1), compute the total manufecturing 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.
Chapter1: Financial Statements And Business Decisions
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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 rete 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 compeny made the following estimates:
Department
Cutting
Finishing
Direct labor-houra
Machine-houEn
Total tixed manutacturing overhead cont
Variable manuf acturing overhead per maehine-hour
Variable manufacturing overhead per direct labor-hour
, 300
68,100
$ 380,000
$2.00
86,000
1,500
$ 411,000
ellcok
Pra
$ 3.75
References
Required:
1. Compute the predetermined overhead rate for each department.
2. The job cost sheet for Job 203, which was started and completed duning the yeat, showed the following:
Departnent
Cutting
Finishing
20
Direct labor-hours
Hachine-hours
Direct materials
Direet lahor eost
85
$ 790
$360
$ 460
Using the predetermined overhead rates that you computed in requirement (1), compute the total manufecturing 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.
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