Question

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			Total
Estimated total machine-hours used		2,500			1,500			4,000
Estimated total fixed manufacturing overhead	$	10,000		$	15,000		$	25,000
Estimated variable manufacturing overhead per machine-hour	$	1.40		$	2.20

	Job P			Job Q
Direct materials	$	13,000		$	8,000
Direct labor cost	$	21,000		$	7,500
Actual machine-hours used:
Molding		1,700			800
Fabrication		600			900
Total		2,300			1,700

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.

9. What were the company’s predetermined overhead rates in the Molding Department and the Fabrication Department?

10. How much manufacturing overhead was applied from the Molding Department to Job P and how much was applied to Job Q?

11. How much manufacturing overhead was applied from the Fabrication Department to Job P and how much was applied to Job Q?

12. If Job P included 20 units, what was its unit product cost?

13. If Job Q included 30 units, what was its unit product cost?

14. Assume that Sweeten Company used cost-plus pricing (and a markup percentage of 80% of total manufacturing cost) to establish selling prices for all of its jobs. What selling price would the company have established for Jobs P and Q? What are the selling prices for both jobs when stated on a per unit basis assuming 20 units were produced for Job P and 30 units were produced for Job Q?

15. What was Sweeten Company’s cost of goods sold for March?

Answer 1

9.

Predetermined overhead rates :

Molding = $10,000/2,500 + $1.40 = $5.4 per machine hour

Fabrication = $15,000/1,500 + $2.20 = $12.2 per machine hour

10.

Manufacturing overhead applied from Molding department:

Job P = 1,700*$5.4 = $9,180

Job Q = 800*$5.4 = $4,320

11.

Manufacturing overhead applied from Fabrication department:

Job P = 600*$12.2 = $7,320

Job Q = 900*$12.2 = $10,980

12&13.

	Job P	Job Q
Direct material	$13,000	$8,000
Direct labor	21,000	7,500
Overhead applied	16,500 (9,180+7,320)	15,300 (4,320+10,980)
Total cost	$50,500	$30,800
Units	20	30
Unit product cost	$2,525	$1,027

14.

	Job P	Job Q
Total manufacturing cost	$50,500	$30,800
Add: Mark up 80%	40,400	24,640
Selling price	90,900	55,440
Units	20	30
Selling price per unit	$4,545	$1,848

15.

Cost of goods sold = $50,500 + 30,800 = $81,300