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 labour cost. At the beginning of the year, the company made the following estimates: Department Cutting Finishing Direct labour-hours 6,000 30,300 Machine-hours 46,600 5,400 Manufacturing overhead cost £419,400 £364,500 Direct labour cost 53,000 243,000 Required: 1. Compute the predetermined overhead rate to be used in the Cutting Department. (Round your answer to 2 decimal places.) Compute the predetermined overhead rate to be used in the Finishing Department. (Round your answer to the nearest per cent.) 2. Assume that the overhead rates that you computed in Question 1 above are in effect. The job cost sheet for Job 203, which was started and completed during the year, showed the following: Department Cutting Finishing Direct labour-hours 7 20 Machine-hours 60 8 Materials requisitioned £40 £300 Direct labour cost 100 180 Compute the total overhead cost applied to Job 203. (Round your answer to the nearest pound.) 3. Would different amounts of overhead cost be assigned to some jobs if the company used a plantwide overhead rate based on direct labour cost, rather than using departmental rates? No computations are necessary. multiple choice No Yes
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 labour cost. At the beginning of the year, the company made the following estimates: Department Cutting Finishing Direct labour-hours 6,000 30,300 Machine-hours 46,600 5,400 Manufacturing overhead cost £419,400 £364,500 Direct labour cost 53,000 243,000 Required: 1. Compute the predetermined overhead rate to be used in the Cutting Department. (Round your answer to 2 decimal places.) Compute the predetermined overhead rate to be used in the Finishing Department. (Round your answer to the nearest per cent.) 2. Assume that the overhead rates that you computed in Question 1 above are in effect. The job cost sheet for Job 203, which was started and completed during the year, showed the following: Department Cutting Finishing Direct labour-hours 7 20 Machine-hours 60 8 Materials requisitioned £40 £300 Direct labour cost 100 180 Compute the total overhead cost applied to Job 203. (Round your answer to the nearest pound.) 3. Would different amounts of overhead cost be assigned to some jobs if the company used a plantwide overhead rate based on direct labour cost, rather than using departmental rates? No computations are necessary. multiple choice No Yes
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter4: Activity-based Costing
Section: Chapter Questions
Problem 30P: Primera Company produces two products and uses a predetermined overhead rate to apply overhead....
Related questions
Question
White Company has two departments, Cutting and Finishing. The company uses a job-order costing system and computes a predetermined |
Department | |||
Cutting | Finishing | ||
Direct labour-hours | 6,000 | 30,300 | |
Machine-hours | 46,600 | 5,400 | |
|
£419,400 | £364,500 | |
Direct labour cost | 53,000 | 243,000 | |
|
Required: | |
1. | Compute the predetermined overhead rate to be used in the Cutting Department. (Round your answer to 2 decimal places.) |
|
|
Compute the predetermined overhead rate to be used in the Finishing Department. (Round your answer to the nearest per cent.) | |
|
2. | Assume that the overhead rates that you computed in Question 1 above are in effect. The |
Department | ||||
Cutting | Finishing | |||
Direct labour-hours | 7 | 20 | ||
Machine-hours | 60 | 8 | ||
Materials requisitioned | £40 | £300 | ||
Direct labour cost | 100 | 180 | ||
|
Compute the total overhead cost applied to Job 203. (Round your answer to the nearest pound.) | |
|
3. | Would different amounts of overhead cost be assigned to some jobs if the company used a plantwide overhead rate based on direct labour cost, rather than using departmental rates? No computations are necessary. |
multiple choice
|
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