Exercise $2-15($Algo$)$ Departmental Predetermined Overhead Rates $[$LO$2-1,$ LO$2-2,$

LO$2-4]$

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:

Required:

Compute the predetermined overhead rate for each department.

The job cost sheet for Job $203,$ which was started and completed during the year, showed the

following:

Using the predetermined overhead rates you computed in requirement $(1),$ compute the total

manufacturing cost assigned to Job $203.$

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?