Compute predetermined overhead rate for each department; apply it
Not what you're looking for?
White Company has two departments, Cutting and Finishing. The company uses a job-order costing system 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 cost. At the beginning of the year, the company made the following estimates:
Department
Cutting Finishing
Direct labor-hours 6,000 30,000
Machine hours 48,000 5,000
Manufacturing overhead cost $360,000 $486,000
Direct labor cost $50,000 $270,000
1. Compute the predetermined overhead rate to be used in each department.
2. Assume that the overhead rates that you computed in (1) above are in effect. The job cost sheet for Job 203, which was started and completed during the year, showed the following:
Department
Cutting Finishing
Direct labor-hours 6 20
Machine hours 80 4
Manufacturing overhead cost $500 $310
Direct labor cost $70 $150,000
Compute the total overhead cost applied to job 203
3. Would you expect substantially different amounts of overhead cost to be assigned to some jobs if the company used a plant-wide overhead rate based on direct labor cost, rather than using departmental rates? Explain.
Purchase this Solution
Solution Summary
The expert computes the predetermined overhead rate for each department.
Solution Preview
Please find the solutions attached
White Company has two departments, Cutting and Finishing. The company uses a job-order costing system 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 cost. At the beginning of the year, the company made the following estimates:
Department
Cutting Finishing
Direct ...
Education
- BA, Ain Shams University, Cairo Egypt
- MBA, California State University, Sacramento
Recent Feedback
- "ty i have more need help with"
- "ty i have jmore i need help with"
- "great help"
- "excellent help"
- "Very helpful and easy to understand."
Purchase this Solution
Free BrainMass Quizzes
Learning Lean
This quiz will help you understand the basic concepts of Lean.
Motivation
This tests some key elements of major motivation theories.
Marketing Research and Forecasting
The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.
Change and Resistance within Organizations
This quiz intended to help students understand change and resistance in organizations
Balance Sheet
The Fundamental Classified Balance Sheet. What to know to make it easy.