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    Faithjames Servano - SA No. 4 - Chapter 3 Job Order Costing

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    Faith James Servano
    High Desert Pottery uses a job-order costing system with predetermined overhead rates. For Job 205: 1) The predetermined overhead rates were $8.6/machine hour for Molding and $1.75/direct labor hour for Painting. 2) The total overhead applied to Job 205 was $2,136. 3) The total cost of Job 205 was $3,908. With 50 units, the unit cost was $78.16. 4) At year-end, Molding was underapplied by $15 and Painting was overapplied by $80.

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    Faithjames Servano - SA No. 4 - Chapter 3 Job Order Costing

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    Faith James Servano
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    High Desert Pottery uses a job-order costing system with predetermined overhead rates. For Job 205: 1) The predetermined overhead rates were $8.6/machine hour for Molding and $1.75/direct labor hour for Painting. 2) The total overhead applied to Job 205 was $2,136. 3) The total cost of Job 205 was $3,908. With 50 units, the unit cost was $78.16. 4) At year-end, Molding was underapplied by $15 and Painting was overapplied by $80.

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    Faithjames Servano - SA No. 4 _Chapter 3 Job Order Costing

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    High Desert Pottery uses a job-order costing system with predetermined overhead rates. For Job 205: 1) The predetermined overhead rates were $8.6/machine hour for Molding and $1.75/direct labor hour for Painting. 2) The total overhead applied to Job 205 was $2,136. 3) The total cost of Job 205 was $3,908. With 50 units, the unit cost was $78.16. 4) At year-end, Molding was underapplied by $15 and Painting was overapplied by $80.

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    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    25 views1 page

    Faithjames Servano - SA No. 4 - Chapter 3 Job Order Costing

    Uploaded by

    Faith James Servano
    High Desert Pottery uses a job-order costing system with predetermined overhead rates. For Job 205: 1) The predetermined overhead rates were $8.6/machine hour for Molding and $1.75/direct labor hour for Painting. 2) The total overhead applied to Job 205 was $2,136. 3) The total cost of Job 205 was $3,908. With 50 units, the unit cost was $78.16. 4) At year-end, Molding was underapplied by $15 and Painting was overapplied by $80.

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    of 1

    Job Order Costing Faith James B.

    Servano
    Seat Work /Assignment 4 BSIE 3-5

    High Desert Pottery works 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 cost. At the
    beginning of the year, the company’s management made the following estimates:
    Department
    Molding Painting
    Direct labor-hours 12,000 60,000
    Machine-hours 70,000 8,000
    Direct materials cost $510,000 $650,000
    Direct labor cost $130,000 $420,000
    Manufacturing overhead cost $602,000 $735,000

    Job 205 was started on August 1 and completed on August 10. The company’s cost records show the following concerning the job:
    Department
    Molding Painting
    Direct labor-hours 30 85
    Machine-hours 110 20
    Direct materials placed into production $470 $332
    Direct labor cost $290 $680
    Required:
    1. Compute the predetermined overhead rate used during the year in the Molding Department. Compute the rate used in the Painting
    Department.
    2. Compute the total overhead cost applied to Job 205.
    3. What would be the total cost recorded for Job 205? If the job contained 50 units, what would be the unit product cost?
    4. At the end of the year, the records of High Desert Pottery works revealed the following actual cost and operating data for all jobs worked
    on during the year:

    Department
    Molding Painting
    Direct labor-hours 10,000 62,000
    Machine-hours 65,000 9,000
    Direct materials placed into production $430,000 $680,000
    Direct labor cost $108,000 $436,000
    Manufacturing overhead cost $570,000 $750,000

    What was the amount of under or overapplied overhead in each department at the end of the year?

    - - - - - ------ --- ---- --- --- --- ---- ---- ---- ---- ---- ---- ----- ----- ---- ---- --- -----
    Solution:
    Job Order Costing - Seatwork 4
    Solution to Problem

    1. Molding Department predetermined overhead rate:


    POH = Estimated total manufacturing overhed cost
    Estimated total amount of the allocation base
    602,000 dollars
    =
    70,000 machine hrs MHs
    = $8.6 per machine hour

    Painting Deprtment predetermined overhead rate:


    POH = Estimated total manufacturing overhed cost
    Estimated total amount of the allocation base
    $735,000
    =
    420,000 direct labor cost
    = $1.75 of direct labor cost

    2. Molding Department overhead applied:


    110 machine-hours x $8.6 per machine-hour $946

    Painting Department overhead applied:


    $680 Direct Labor Cost X $1.75
    %of DirectLabor Cost $1,190

    $2,136
    Total overhed cost

    3. Total cost of Job205:


    Molding Painting
    Dept Dept Total
    $470
    Direct materials $332 $802

    Direct labor $290 $680 $970

    Manufacturing overhead applied $946 $1190 $2136

    Total Cost $1,706


    $2,202 $3,908

    Unit Product cost forJob 205:


    $3,908
    Total cost $78.16

    Units sold 50

    Molding Painting
    4. Dept Dept
    Manufacturing overhead incurred $570,000 $750,000

    Manufacturing overhead applied:


    $8.769 $569,985
    $65,000
    Mhrs x
    $749,920
    $436,000 DLC x $1.72

    Underapplied (or overapplied) overhead $15 $80

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