High Desert Potteryworks makes a variety of pottery products that it sells to retailers. The company uses a job-order costing system in which departmental predetermined overhead rates are used to apply manufacturing overhead cost to jobs. The predetermined overhead rate in the Molding Department is based on machine-hours, and the rate in the Painting Department is based on direct labor- hours. At the beginning of the year, the company provided the following estimates: Direct labor-hours Machine-hours Fixed manufacturing overhead cost Variable manufacturing overhead per machine-hour Variable manufacturing overhead per direct labor-hour Direct labor- hours Machine- hours Direct materials Direct labor cost Department Molding $ $ Painting 72 Job 205 was started on August 1 and completed on August 10. The company's cost records show the following information concerning the job: 370 Department Molding 934 126 70 $ 1,220 700 $ 1,010 Painting 37,500 $ 89,000 $ 186,900 2.60 53,200 36,000 $ 468,160 $ 4.60 Required: 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. 3-a. What would be the total manufacturing cost recorded for Job 205? 3-b. If the job contained 26 units, what would be the unit product cost?
High Desert Potteryworks makes a variety of pottery products that it sells to retailers. The company uses a job-order costing system in which departmental predetermined overhead rates are used to apply manufacturing overhead cost to jobs. The predetermined overhead rate in the Molding Department is based on machine-hours, and the rate in the Painting Department is based on direct labor- hours. At the beginning of the year, the company provided the following estimates: Direct labor-hours Machine-hours Fixed manufacturing overhead cost Variable manufacturing overhead per machine-hour Variable manufacturing overhead per direct labor-hour Direct labor- hours Machine- hours Direct materials Direct labor cost Department Molding $ $ Painting 72 Job 205 was started on August 1 and completed on August 10. The company's cost records show the following information concerning the job: 370 Department Molding 934 126 70 $ 1,220 700 $ 1,010 Painting 37,500 $ 89,000 $ 186,900 2.60 53,200 36,000 $ 468,160 $ 4.60 Required: 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. 3-a. What would be the total manufacturing cost recorded for Job 205? 3-b. If the job contained 26 units, what would be the unit product cost?
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....
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Transcribed Image Text:High Desert Potteryworks makes a variety of pottery products that it sells to retailers. The company uses a job-order costing system in
which departmental predetermined overhead rates are used to apply manufacturing overhead cost to jobs. The predetermined
overhead rate in the Molding Department is based on machine-hours, and the rate in the Painting Department is based on direct labor-
hours. At the beginning of the year, the company provided the following estimates:
Direct labor-hours
Machine-hours
Fixed manufacturing overhead cost
Variable manufacturing overhead per
machine-hour
Variable manufacturing overhead per direct
labor-hour
Direct
labor-
hours
Machine-
hours
Direct
materials
Direct
labor
cost
Department
Molding
$
$
Job 205 was started on August 1 and completed on August 10. The company's cost records show the following information concerning
the job:
Painting
72
370
Department
Molding
934
126
70
$ 1,220
Painting
37,500
89,000
$ 186,900
700 $ 1,010
$
2.60
53,200
36,000
$ 468,160
$
4.60
Required:
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.
3-a. What would be the total manufacturing cost recorded for Job 205?
3-b. If the job contained 26 units, what would be the unit product cost?
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