White Company has two departments, Cutting and Finishing. The company uses a job-order costing system and...
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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 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 Cutting 7.900 59,900 Finishing 74,000 3,000 Total fixed manufacturing overhead cont $ $30,000 Variable manufacturing overhead per machine-hour Variable manufacturing overhead per direct labor-hour $360,000 $ 3.00 $ 3.75 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: Cutting Department Finishing 10 4 Direct labor-hours Machine-hours 09 $220 Direct materials $350 Direct labor cost #100 $200 Using the predetermined overhead rates that you computed in requirement (1), compute the total manufacturing cost assigned to 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? 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 Cutting 7.900 59,900 Finishing 74,000 3,000 Total fixed manufacturing overhead cont $ $30,000 Variable manufacturing overhead per machine-hour Variable manufacturing overhead per direct labor-hour $360,000 $ 3.00 $ 3.75 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: Cutting Department Finishing 10 4 Direct labor-hours Machine-hours 09 $220 Direct materials $350 Direct labor cost #100 $200 Using the predetermined overhead rates that you computed in requirement (1), compute the total manufacturing cost assigned to 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?
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Req 1 Req 2 Req 3 Department Cutting Finishing Direct laborhours 6000 30000 Machinehours 48000 5000 ... View the full answer
Related Book For
Managerial Accounting
ISBN: 978-1259307416
16th edition
Authors: Ray Garrison, Eric Noreen, Peter Brewer
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