High Desert Potteryworks 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 moulding department is based on machine-hours, and the rate in the painting department is based on direct labour cost. At the beginning of the year, the company’s management made the following estimates:
Job 205 was started on August 1 and completed on August 10. The company’s cost records show the following information concerning the job:
Required:
1. Compute the predetermined overhead rate used during the year in the moulding 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 cost per unit?
4. At the end of the year, the records of High Desert Potteryworks revealed the following actual cost and operating data for all jobs worked on during the year:
What was the amount of under- or overapplied overhead in each department at the end of the year?
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