Question

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Smithson Company uses a job-order costing system and has two manufacturing departments—Molding and Fabrication. The company provided the following estimates at the beginning of the year:

	Molding		Fabrication		Total
Machine-hours		30,000		40,000		70,000
Fixed manufacturing overhead costs	$	710,000	$	250,000	$	960,000
Variable manufacturing overhead per machine-hour	$	5.00	$	5.00

  

During the year, the company had no beginning or ending inventories and it started, completed, and sold only two jobs—Job D-75 and Job C-100. It provided the following information related to those two jobs:

Job D-75:	Molding		Fabrication		Total
Direct materials cost	$	370,000	$	329,000	$	699,000
Direct labor cost	$	250,000	$	120,000	$	370,000
Machine-hours		21,000		9,000		30,000

  

Job C-100:	Molding		Fabrication		Total
Direct materials cost	$	210,000	$	280,000	$	490,000
Direct labor cost	$	110,000	$	250,000	$	360,000
Machine-hours		9,000		31,000		40,000

  

  
Smithson had no overapplied or underapplied manufacturing overhead during the year.

15.

value:
10.00 points

Required information

Assume Smithson uses a plantwide overhead rate based on machine-hours.  

Required:

1-a. Compute the predetermined plantwide overhead rate. (Round your answer to 2 decimal places.)

          

1-b. Compute the total manufacturing costs assigned to Job D-75 and Job C-100. (Round your intermediate calculations to 2 decimal places.)

          

1-c. If Smithson establishes bid prices that are 120% of total manufacturing costs, what bid price would it have established for Job D-75 and Job C-100? (Round your intermediate calculations to 2 decimal places.)

          

1-d. What is Smithson’s cost of goods sold for the year? (Round your intermediate calculations to 2 decimal places.)

       

Assume Smithson uses departmental overhead rates based on machine-hours.

2-a. Compute the predetermined departmental overhead rates. (Round your answer to 2 decimal places.)

         

2-b. Compute the total manufacturing costs assigned to Job D-75 and Job C-100. (Round your intermediate calculations to 2 decimal places.)

          

2-c. If Smithson establishes bid prices that are 120% of total manufacturing costs, what bid price would it have established for Job D-75 and Job C-100? (Round your intermediate calculations to 2 decimal places.)

          

2-d. What is Smithson’s cost of goods sold for the year? (Round your intermediate calculations to 2 decimal places.)

       

Answer 1

Solution 1:

Computation of Plantwide predetermined Overhead Rate
Fixed Manufacturing Overhead costs	$9,60,000
Variable Manufacturing Overhead cost (70000*$5)	$3,50,000
Total Estimated Overhead costs (a)	$13,10,000
/Total Estimated Machine Hours (b)	70000
Plantwide Overhead Rate (a/b)	$18.71
Computation of Total Manufacturing Costs
	Job D-75	Job C-100
Direct Material Costs	$6,99,000	$4,90,000
Direct Labor Costs	$3,70,000	$3,60,000
Manufacturing Overhead costs (Total Machine Hours*$18.71)	$5,61,300	$7,48,400
Total Manufacturing Costs	$16,30,300	$15,98,400
Computation of Bid Prices
	Job D-75	Job C-100
Total Manufacturing Costs	$16,30,300	$15,98,400
Bid price (Total Manufacturing Costs*120%)	$19,56,360	$19,18,080
Computation of Delph's Cost of Goods sold
Total Manufacturing Costs of Job D-75	$16,30,300
Total Manufacturing Costs of Job C-100	$15,98,400
Total Cost of Goods sold	$32,28,700

Solution 2:

Computation of Departmental predetermined Overhead Rate
	Moding	Fabrication
Fixed Manufacturing Overhead costs	$7,10,000	$2,50,000
Variable Manufacturing Overhead cost [(30000*$5) and (40000*$5)]	$1,50,000	$2,00,000
Total Estimated Overhead costs (a)	$8,60,000	$4,50,000
/Total Estimated Machine Hours (b)	30000	40000
Plantwide Overhead Rate (a/b)	$28.67	$11.25
Computation of Total Manufacturing Costs
	Job D-75	Job C-100
Direct Material Costs	$6,99,000	$4,90,000
Direct Labor Costs	$3,70,000	$3,60,000
Manufacturing Overhead costs (21000*$28.67 + 9000*$11.25) and (9000*$28.67+ 31000*$11.25)	$7,03,320	$6,06,780
Total Manufacturing Costs	$17,72,320	$14,56,780
Computation of Bid Prices
	Job D-75	Job C-100
Total Manufacturing Costs	$17,72,320	$14,56,780
Bid price (Total Manufacturing Costs*120%)	$21,26,784	$17,48,136
Computation of Delph's Cost of Goods sold
Total Manufacturing Costs of Job D-75	$17,72,320
Total Manufacturing Costs of Job C-100	$14,56,780
Total Cost of Goods sold	$32,29,100