White Company has two departments, Cutting and Finishing. The company uses job-order costing 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: Direct labor-hours Machine-hours Direct materials Direct labor cost Cutting Direct labor-hours Machine-hours Total fixed manufacturing overhead cost Variable manufacturing overhead per machine-hour Variable manufacturing overhead per direct labor-hour 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 4 86 $ 790 $ 84 Finishing 12 $360 $ 252 Department Cutting 7,000 67,000 $ 370,000 $ 4.00 Required 1 Required 2 Required 3 Compute the predetermined overhead rate for each department. Note: Round your answers to 2 decimal places. Finishing 74,000 2,200 $ 480,000 Complete this question by entering your answers in the tabs given below. Using the predetermined overhead rates you computed in requirement (1), compute the total manufacturing cost assigned to Job 203. 0 $3.75 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?
White Company has two departments, Cutting and Finishing. The company uses job-order costing 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: Direct labor-hours Machine-hours Direct materials Direct labor cost Cutting Direct labor-hours Machine-hours Total fixed manufacturing overhead cost Variable manufacturing overhead per machine-hour Variable manufacturing overhead per direct labor-hour 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 4 86 $ 790 $ 84 Finishing 12 $360 $ 252 Department Cutting 7,000 67,000 $ 370,000 $ 4.00 Required 1 Required 2 Required 3 Compute the predetermined overhead rate for each department. Note: Round your answers to 2 decimal places. Finishing 74,000 2,200 $ 480,000 Complete this question by entering your answers in the tabs given below. Using the predetermined overhead rates you computed in requirement (1), compute the total manufacturing cost assigned to Job 203. 0 $3.75 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?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:White Company has two departments, Cutting and Finishing. The company uses job-order costing 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:
Direct labor-hours
Machine-hours
Direct materials
Direct labor cost
Cutting
4
86
$ 790
$ 84
Direct labor-hours
Machine-hours
Total fixed manufacturing overhead cost
Variable manufacturing overhead per machine-hour
Variable manufacturing overhead per direct labor-hour
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
Finishing
12
3
$ 360
$ 252
Department
Cutting
7,000
67,000
$ 370,000
$ 4.00
0
Required 1 Required 2
Required 3
Compute the predetermined overhead rate for each department.
Note: Round your answers to 2 decimal places.
Finishing
74,000
2,200
$ 480,000
Complete this question by entering your answers in the tabs given below.
Using the predetermined overhead rates you computed in requirement (1), compute the total manufacturing cost assigned to Job
203.
0
$3.75
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?
![Exercise 2B-1 (Algo) Overhead Rate Based on Capacity [LO2-7]
Wixis Cabinets makes custom wooden cabinets for high-end stereo systems from specialty woods. The company uses a job-order
costing system. The capacity of the plant is determined by the capacity of its constraint, which is time on the automated bandsaw that
makes finely beveled cuts in wood according to the preprogrammed specifications of each cabinet. The bandsaw can operate up to
184 hours per month. The estimated total manufacturing overhead cost at capacity is $15,088 per month. The company bases its
predetermined overhead rate on capacity, so its predetermined overhead rate is $82 per hour of bandsaw use.
The results of a recent month's operations appear below:
Sales
Beginning inventories
Ending inventories
Direct materials
Direct labor
Manufacturing overhead incurred
Selling and administrative expense
Actual hours of bandsaw use
Required:
1-b. What was the cost of unused capacity during the month?
1-a. Prepare an income statement for the month. Your income statement should include the cost of unused capacity as a period
expense.
$ 43,800
$ $0
$0
Required 1A Required 1B
$5,310
$8,840
$14,260
$ 8,220
154
Complete this question by entering your answers in the table below.
Wixis Cabinets
Income Statement
Prepare an income statement for the month. Your income statement should include the cost of unused capacity as a period
expense.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc9737efd-391f-457a-98f6-aa044a0527f1%2F1f1a0c7c-127a-4eb4-ae0d-61041ca60212%2F1ikqb9_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Exercise 2B-1 (Algo) Overhead Rate Based on Capacity [LO2-7]
Wixis Cabinets makes custom wooden cabinets for high-end stereo systems from specialty woods. The company uses a job-order
costing system. The capacity of the plant is determined by the capacity of its constraint, which is time on the automated bandsaw that
makes finely beveled cuts in wood according to the preprogrammed specifications of each cabinet. The bandsaw can operate up to
184 hours per month. The estimated total manufacturing overhead cost at capacity is $15,088 per month. The company bases its
predetermined overhead rate on capacity, so its predetermined overhead rate is $82 per hour of bandsaw use.
The results of a recent month's operations appear below:
Sales
Beginning inventories
Ending inventories
Direct materials
Direct labor
Manufacturing overhead incurred
Selling and administrative expense
Actual hours of bandsaw use
Required:
1-b. What was the cost of unused capacity during the month?
1-a. Prepare an income statement for the month. Your income statement should include the cost of unused capacity as a period
expense.
$ 43,800
$ $0
$0
Required 1A Required 1B
$5,310
$8,840
$14,260
$ 8,220
154
Complete this question by entering your answers in the table below.
Wixis Cabinets
Income Statement
Prepare an income statement for the month. Your income statement should include the cost of unused capacity as a period
expense.
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