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White Company has two departments, Cutting and Finishing The company uses a job-order costing system and computes a predetermined overhead rete 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 Cutting , 300 68,100 $310,000 $2.00 Finishing 86,000 1,500 $ 411,000 Direct labor-hours Machine-houEN Total fixed manutacturing overhead cost Variable manufacturing overhead per naehine-hour Variable manutacturing overhead per direct labor-hour Provm $ 3.75 rences Required: 1. Compute the predetermined overhoad rate for each department. 2. The job cost sheet for Job 203, which was started and completed during the year, showed the following: Departnent Cutting Piniahing Direct labor-hours Hachine-hours Direct materials Direet labor esst 14 20 85 $ 790 $360 Using the predetermined overhead rates that you computed in requirement (1), compute the total manufecturing cost assigned to Job 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 rete 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 Cutting , 300 68,100 $310,000 $2.00 Finishing 86,000 1,500 $ 411,000 Direct labor-hours Machine-houEN Total fixed manutacturing overhead cost Variable manufacturing overhead per naehine-hour Variable manutacturing overhead per direct labor-hour Provm $ 3.75 rences Required: 1. Compute the predetermined overhoad rate for each department. 2. The job cost sheet for Job 203, which was started and completed during the year, showed the following: Departnent Cutting Piniahing Direct labor-hours Hachine-hours Direct materials Direet labor esst 14 20 85 $ 790 $360 Using the predetermined overhead rates that you computed in requirement (1), compute the total manufecturing cost assigned to Job 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.

Cornerstones of Cost Management (Cornerstones Series)
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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White Company has two departments, Cutting and Finishing The company uses a job-order costing system and computes a predetermined overhead rete 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 compeny made the following estimates: Department Cutting Finishing Direct labor-houra Machine-houEn Total tixed manutacturing overhead cont Variable manuf acturing overhead per maehine-hour Variable manufacturing overhead per direct labor-hour , 300 68,100 $ 380,000 $2.00 86,000 1,500 $ 411,000 ellcok Pra $ 3.75 References Required: 1. Compute the predetermined overhead rate for each department. 2. The job cost sheet for Job 203, which was started and completed duning the yeat, showed the following: Departnent Cutting Finishing 20 Direct labor-hours Hachine-hours Direct materials Direet lahor eost 85 $ 790 $360 $ 460 Using the predetermined overhead rates that you computed in requirement (1), compute the total manufecturing cost assigned to Job 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.
Transcribed Image Text:White Company has two departments, Cutting and Finishing The company uses a job-order costing system and computes a predetermined overhead rete 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 compeny made the following estimates: Department Cutting Finishing Direct labor-houra Machine-houEn Total tixed manutacturing overhead cont Variable manuf acturing overhead per maehine-hour Variable manufacturing overhead per direct labor-hour , 300 68,100 $ 380,000 $2.00 86,000 1,500 $ 411,000 ellcok Pra $ 3.75 References Required: 1. Compute the predetermined overhead rate for each department. 2. The job cost sheet for Job 203, which was started and completed duning the yeat, showed the following: Departnent Cutting Finishing 20 Direct labor-hours Hachine-hours Direct materials Direet lahor eost 85 $ 790 $360 $ 460 Using the predetermined overhead rates that you computed in requirement (1), compute the total manufecturing cost assigned to Job 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.
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