Question

24. 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 Molding Department is based on machine-hours, and the rate in the Painting Department is based on direct labor 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:
(b) Compute the total overhead cost applied to Job 205.

Answer 1

The total overhead cost is attached as an image with the solution.

What is overhead cost?

• The term "overhead" refers to a company's continuing operating expenses but does not include the direct expenditures involved in producing a good or service.
• Overhead expenses may be fixed, fluctuating, or a combination of the two.
• There are various types of overhead, including administrative overhead, which covers expenses linked to running a business.
• The income statement lists administrative costs.

Overhead costs are recorded on an organization's income statement and have a direct impact on the overall profitability of the enterprise. To calculate net income, commonly known as the bottom line for the corporation, overhead costs must be taken into consideration. Net revenue, often known as the top line for the business, is subtracted from all production-related and overhead costs to determine net profitability.

The total overhead cost is attached as an image with the solution.

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