Question

Required information [The following information applies to the questions displayed below.] Sweeten Company had no jobs in progress at the beginning of March and no beginning inventories. The company has two manufacturing departments--Molding and Fabrication. It started, completed, and sold only two jobs during March-Job P and Job Q. The following additional information is available for the company as a whole and for Jobs P and Q (all data and questions relate to the month of March): Molding Fabrication 1,500 $16,050 2.90 Total Estimated total machine-hours used 4,000 $27,800 2,500 $11,750 2.10 Estimated total fixed manufacturing overhead Estimated variable manufacturing overhead per machine-hour Job P Job O Direct materials $20,000 $26,600 $11,500 $10,300 Direct labor cost Actual machine-hours used: Molding 2,400 1,500 1,600 3,100 1,300 Fabrication 3,700 Total Sweeten Company had no underapplied or overapplied manufacturing overhead costs during the month. Required: For questions 1-8, assume that Sweeten Company uses a plantwide predetermined overhead rate with machine-hours as the allocation base. For questions 9-15, assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both departments.

Answer 1

1. Plant-wide predetermined overhead rate = Estimated total manufacturing overhead / Estimated total machine hours

Plant-wide predetermined overhead rate = $27,800+(2,500*$2.1)+(1,500*$2.9) / 4,000

Plant-wide predetermined overhead rate = $27,800+5,250+4,350 / 4,000 = $9.35 per machine hour

2. Manufcaturing overhead applied::

Job P = 3,700*$9.35 = $34,595

Job Q = 3,100*$9.35 = $28,985

3. Total manufacturing cost assigned to Job P = Direct material+Direct labor+Manufacturing overhead applied

Total manufacturing cost assigned to Job P = $20,000+26,600+34,595 = $81,195

4. Unit product cost Job P = Total manufacturing cost / Units produced

Unit product cost Job P = $81,195 / 20 = $4,060

5. Total manufacturing cost assigned to Job Q = $11,500+10,300+28,985 = $50,785

6. Unit product cost Job Q = $50,785 / 30 = $1,693

7.

	Job P	Job Q
Total manufacturing cost	$81,195	$50,785
Add: Markup@80%	64,956	40,628
Selling price	146,151	91,413
Units produced	20	30
Selling price per unit	$7,308	$3,047

8.

Sweeten company cost of goods sold = $81,195+50,785 = $131,980

9. Predetermined overhead = Estimated total manufacturing overhead / Estimated machine hours

Molding department = $11,750+2,500*2.10 / 2,500 = $6.8 per machine hour

Fabrication department = $16,050+1,500*$2.90 / 1,500 = $13.6 per machine hour

10.

Molding department to Job P = 2,400*$6.8 = $16,320

Molding department to Job Q = 1,500*$6.8 = $10,200

11.

Fabrication department to Job P = 1,300*$13.6 = $17,680

Fabrication department to Job Q = 1,600*$13.6 = $21,760

12.

Job P unit product cost = Direct material+Direct labor+Manufacturing overhead applied / Units

Job P unit product cost = $20,000+26,600+16,320+17,680 / 20 = $4,030 per unit

13.

Job Q unit product cost = $11,500+10,300+10,200+21,760 / 30 = $1,792 per unit

14.

	Job P	Job Q
Total manufacturing cost	$80,600	$53,760
Add: Markup@80%	64,480	43,008
Selling price	145,080	96,768
Units produced	20	30
Selling per unit	$7,254	$3,226

15.

Sweeten company cost of goods sold = $80,600+53,760 = $134,360