complete the finance question.
White Company has two departments, Cutting and Finishing. The company uses job-order costing 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-hours. At the beginning of the year, the company made the following estimates:
| Department | ||
|---|---|---|
| Cutting | Finishing | |
| Direct labor-hours | 7,600 | 89,000 |
| Machine-hours | 58,300 | 2,800 |
| Total fixed manufacturing overhead cost | $ 370,000 | $ 512,000 |
| Variable manufacturing overhead per machine-hour | $ 3.00 | 0 |
| Variable manufacturing overhead per direct labor-hour | 0 | $4.75 |
Required:
- Compute the predetermined overhead rate for each department.
- The job cost sheet for Job 203, which was started and completed during the year, showed the following:
Department Cutting Finishing Direct labor-hours 3 11 Machine-hours 81 5 Direct materials $ 750 $ 380 Direct labor cost $ 66 $ 242 Using the predetermined overhead rates you computed in requirement (1), compute the total manufacturing cost assigned to Job 203.
- 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?
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