High Desert Potteryworks makes a variety of pottery products that it sells to retailers. The company uses a job-order costing system in which departmental 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-hours. At the beginning of the year, the company provided the following estimates:

Department
Molding Painting
Direct labor-hours 30,000 54,200
Machine-hours 88,000 36,000
Fixed manufacturing overhead cost $ 228,800 $ 514,900
Variable manufacturing overhead per machine-hour $ 2.60 -
Variable manufacturing overhead per direct labor-hour - $ 4.60

Job 205 was started on August 1 and completed on August 10. The company's cost records show the following information concerning the job:

Department
Molding Painting
Direct labor-hours 82 133
Machine-hours 380 72
Direct materials $ 938 $ 1,240
Direct labor cost $ 730 $ 1,010

Required:

1. Compute the predetermined overhead rates used in the Molding Department and the Painting Department.

2. Compute the total overhead cost applied to Job 205.

3-a. What would be the total manufacturing cost recorded for Job 205?

3-b. If the job contained 37 units, what would be the unit product cost?

1. Molding Department:

The estimated total manufacturing overhead cost in the Molding Department is computed as follows:

Y = $497,000 + $1.50 per MH × 70,000 MHs

Estimated fixed manufacturing overhead $ 497,000

Estimated variable manufacturing overhead:

$1.50 per MH × 70,000 MHs= 105,000

Estimated total manufacturing overhead cost $ 602,000

The predetermined overhead rate is computed as follows:

Estimated total manufacturing overhead (a) $ 602,000

Estimated total machine-hours (b) 70,000 MHs

Predetermined overhead rate (a) ÷ (b) $ 8.60 per MH

Painting Department:

The estimated total manufacturing overhead cost in the Painting Department is computed as follows:

Y = $615,000 + $2.00 per DLH × 60,000 DLHs

Estimated fixed manufacturing overhead $ 615,000

Estimated variable manufacturing overhead:

$2.00 per DLH × 60,000 DLHs= 120,000

Estimated total manufacturing overhead cost $ 735,000

The predetermined overhead rate is computed as follows:

Estimated total manufacturing overhead (a) $ 735,000

Estimated total DLHs (b) 60,000 DLHs

Predetermined overhead rate (a) ÷ (b) $ 12.25 per DLH

2.

Molding Department overhead applied:

110 machine-hours × $8.60 per machine-hour

$ 946

Painting Department overhead applied:

84 direct labor-hours × $12.25 per DLH

1,029

Total overhead cost $ 1,975

3-a.

Total cost of Job 205:

Molding Dept. Painting Dept. Total

Direct materials $770 $1,332 $2,102

Direct labor 525 1,470 1,995

Manufacturing overhead applied

946 1,029 1,975

Total manufacturing cost

$ 2,241 $3,831 $6,072

3-b.

Unit product cost for Job 205:

Total manufacturing cost (a) $ 6,072

Number of units in the job (b) 50 units

Unit product cost (a) ÷ (b) $ 121.44 per unit

Explanation: