Diewold Company has two departments, Milling and Assembly. The company uses a job-order costing system and...

  

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Diewold Company has two departments, Milling and Assembly. The company uses a job-order costing system and computes a predetermined overhead rate in each department. The Milling Department bases its rate on machine-hours, and the Assembly Department bases its rate on direct labor-hours. At the beginning of the year, the company made the following estimates: Department Milling Assembly Direct labor-hours 8,000 80,000 Machine-hours 60,000 3,000 Total fixed manufacturing overhead cost $390,000 S500,000 Variable manufacturing overhead per machine-hour S2.00 Variable manufacturing overhead per direct labor-hour $3.75 Required: 1. Compute the predetermined overhead rate to be used in each department. 2. Assume that the overhead rates you computed in (1) above are in effect. The job cost sheel for lob 407, which was started and completed during the year, showed the following: Department Milling Assembly Direct labour-hours 5 20 Machine-hours 90 4 Materials requisitioned S800 S370 Direct labour cost $45 $160 Compute the total manufacturing cost assigned to Job 407. 3. Would you expect substantially different amounts of overhead cost to be charged to some jobs if the company used a plantwide overhead rate based on direct labor-hours instead of using departmental rates? Explain. No computations are necessary. Diewold Company has two departments, Milling and Assembly. The company uses a job-order costing system and computes a predetermined overhead rate in each department. The Milling Department bases its rate on machine-hours, and the Assembly Department bases its rate on direct labor-hours. At the beginning of the year, the company made the following estimates: Department Milling Assembly Direct labor-hours 8,000 80,000 Machine-hours 60,000 3,000 Total fixed manufacturing overhead cost $390,000 S500,000 Variable manufacturing overhead per machine-hour S2.00 Variable manufacturing overhead per direct labor-hour $3.75 Required: 1. Compute the predetermined overhead rate to be used in each department. 2. Assume that the overhead rates you computed in (1) above are in effect. The job cost sheel for lob 407, which was started and completed during the year, showed the following: Department Milling Assembly Direct labour-hours 5 20 Machine-hours 90 4 Materials requisitioned S800 S370 Direct labour cost $45 $160 Compute the total manufacturing cost assigned to Job 407. 3. Would you expect substantially different amounts of overhead cost to be charged to some jobs if the company used a plantwide overhead rate based on direct labor-hours instead of using departmental rates? Explain. No computations are necessary.

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Answer Step 1 1 Milling Department The fixed and variable cost components of the Milling department ... View the full answer