How do you solve for total manufacturing costs using the table?
Exercise 2-13 Departmental Predetermined Overhead Rates [LO2-1, LO2-2, LO2-4]
White Company has two departments, Cutting and Finishing. The company uses a job-order costing system and computes a Department bases its rate on direct labor-hours. At the beginning of the year, the company made the following estimates:
Department Cutting Finishing
Direct labor-hours 6,100 74,000
Machine-hours 62,000 1,400
Total fixed manufacturing overhead cost $390,000 $431,000
Variable manufacturing overhead per machine-hour $4.00 $4.75
Variable manufacturing overhead per direct labor-hour $4.00 $4.75
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:
Department Cutting Finishing
Direct labor-hours 5 16
Machine-hours 87 3
Direct materials $730 $380
Direct labor cost $125 $400
Using the predetermined overhead rates that you computed in requirement (1), compute the total manufacturing 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?
Required 1
Required 2
Required 3
Using the predetermined overhead rates that you computed in requirement (1), compute the total manufacturing cost assigned to Job 203. (Round your intermediate calculations to 2 decimal places and your final answer to the nearest dollar amount.)
Total manufacturing cost
