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

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Related questions

Question

		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