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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$-$hours. At the beginning of the year, the company made the following estimates:

$20$ points

$8010428$

Direct labor$-$hours

e$-$hours

Total fixed manufacturing overhead cost Variable manufacturing overhead per machine$-$hour

Variable manufacturing overhead per direct labor$-$hour

Required:

Ompartment Cutting

$8,300$

$53,800$

$$390,000$

$1,200$

$ $2\mathrm{.}00$

$$489,000$

$$3\mathrm{.}75$

$1.$ 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

Direct labor$-$hours

Cutting Finishing

$6$

Machine$-$hours

Direct materials

$85$

$6$

Direct labor cost

$ $700$

$$390$

$ $242$

$ $132$

$11$

Using the predetermined overhead rates that you computed in requirement $(1),$ compute the total manufacturing cost ass Job $203.$

$3.$ Would you expect substantially different amounts of overhead cost to be assigned to some jobs if the company used a predetermined overhead rate based on direct labor$-$hours, rather than using departmental rates?

$68,000$

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