High Desert Potteryworks makes a variety of pottery products that it sells to retailers such as Home Depot. The company uses a job-order costing system in which 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's management made the following estimates: Department Molding Painting Direct labor-hours 39,500 51,200 Machine-hours 87,000 33,000 Direct materials cost $186,000 $196,000 Direct labor cost $277,000 $513,000 Fixed manufacturing overhead cost $243,600 $465,920 Variable manufacturing overhead per machine-hour $2.60 - Variable manufacturing overhead per direct labor-hour - $4.60 Job 205 was started on August 1 and completed on August 10. The company's cost records show the following information concerning the job: Department Molding Painting Direct labor-hours 81 132 Machine-hours 370 67 Materials placed into production $944 $1,260 Direct labor cost $690 $960 Required: 1. Compute the predetermined overhead rate used during the year in the Molding Department. Compute the rate used in the Painting Department. (Round your answers to 2 decimal places.) 2. Compute the total overhead cost applied to Job 205. (Round "Predetermined overhead rate" to 2 decimal places, other intermediate calculations and final answers to the nearest dollar amount.) 3-a. What would be the total cost recorded for Job 205? (Round "Predetermined overhead rate" to 2 decimal places, other intermediate calculations and final answers to the nearest dollar amount.) 3-b. If the job contained 29 units, what would be the unit product cost? (Round "Predetermined overhead rate" and final answer to 2 decimal places and other intermediate calculations to the nearest dollar amount.)
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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High Desert Potteryworks makes a variety of pottery products that it sells to retailers such as Home Depot. The company uses a |
| Department | ||
| Molding | Painting | |
| Direct labor-hours | 39,500 | 51,200 |
| Machine-hours | 87,000 | 33,000 |
| Direct materials cost | $186,000 | $196,000 |
| Direct labor cost | $277,000 | $513,000 |
| Fixed manufacturing overhead cost | $243,600 | $465,920 |
| Variable manufacturing overhead per machine-hour | $2.60 | - |
| Variable manufacturing overhead per direct labor-hour | - | $4.60 |
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Job 205 was started on August 1 and completed on August 10. The company's cost records |
| Department | ||
| Molding | Painting | |
| Direct labor-hours | 81 | 132 |
| Machine-hours | 370 | 67 |
| Materials placed into production | $944 | $1,260 |
| Direct labor cost | $690 | $960 |
| Required: |
| 1. |
Compute the predetermined overhead rate used during the year in the Molding Department. Compute the rate used in the Painting Department. (Round your answers to 2 decimal places.) |
| 2. |
Compute the total overhead cost applied to Job 205. (Round "Predetermined overhead rate" to 2 decimal places, other intermediate calculations and final answers to the nearest dollar amount.) |
| 3-a. |
What would be the total cost recorded for Job 205? (Round "Predetermined overhead rate" to 2 decimal places, other intermediate calculations and final answers to the nearest dollar amount.) |
| 3-b. |
If the job contained 29 units, what would be the unit product cost? (Round "Predetermined overhead rate" and final answer to 2 decimal places and other intermediate calculations to the nearest dollar amount.) |
| 4. |
At the end of the year, the records of High Desert Potteryworks revealed the following actual cost and operating data for all jobs worked on during the year: |
| Department | ||
| Molding | Painting | |
| Direct labor-hours | 32,000 | 56,000 |
| Machine-hours | 86,800 | 25,000 |
| Direct materials cost | $167,600 | $414,000 |
| Direct labor cost | $108,000 | $436,000 |
| Manufacturing overhead cost | $479,320 | $731,200 |
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What was the amount of underapplied or overapplied overhead in each department at the end of the year? (Round "Predetermined overhead rate" to 2 decimal places, other intermediate calculations and final answers to the nearest dollar amount. Select "None" for no effect (i.e., zero variance).) |
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