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: Department Direct labor-hours Machine-hours Total 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 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: Department Cutting 5 83 $ 730 $. 95 Finishing 12 6 Cutting 8,700 65,900 $ 400,000 $ 4.00 $360 $ 228 Finishing 64,000 2,900 $ 433,000 $ 3.75 Using the predetermined overhead rates that you computed in requirement (1), compute the total manufacturing cost assigned to J 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 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: Department Direct labor-hours Machine-hours Total 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 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: Department Cutting 5 83 $ 730 $. 95 Finishing 12 6 Cutting 8,700 65,900 $ 400,000 $ 4.00 $360 $ 228 Finishing 64,000 2,900 $ 433,000 $ 3.75 Using the predetermined overhead rates that you computed in requirement (1), compute the total manufacturing cost assigned to J 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
Section: Chapter Questions
Problem 1Q
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