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	$	13,250		$	16,950		$	30,200
Estimated variable manufacturing overhead per machine-hour	$	2.70		$	3.50

	Job P			Job Q
Direct materials	$	26,000		$	14,500
Direct labor cost	$	31,400		$	12,700
Actual machine-hours used:
Molding		3,000			2,100
Fabrication		1,900			2,200
Total		4,900			4,300

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.

Foundational 3-10 (Algo)

a. How much manufacturing overhead was applied from the Molding Department to Job P and how much was applied to Job Q? (Do not round intermediate calculations.)

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

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

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

e. 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?

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

Answer 1

Solution a:

Computation of departmental overhead rates
Particulars	Molding	Fabrication
Fixed manufacturing overhead	$13,250	$16,950
Variable manufacturing overhead	$6,750	$5,250
Total manufacturing overhead	$20,000	$22,200
Nos of machine hours	2500	1500
Overhead rate per machine hour	$8.00	$14.80

Computation of overhead applied from Molding department
Particulars	Job P	Job Q
Actual machine hours	3000	2100
Overhead rate	$8.00	$8.00
Overhead applied to jobs	$24,000.00	$16,800.00

Solution b:

Computation of overhead applied from Fabrication department
Particulars	Job P	Job Q
Actual machine hours	1900	2200
Overhead rate	$14.80	$14.80
Overhead applied to jobs	$28,120.00	$32,560.00

Solution c & d:

Computation of Overhead applied to Job
Particulars	Job P	Job Q
Manufacturing overhead - Molding	$24,000.00	$16,800.00
Manufacturing overhead - Fabrication	$28,120.00	$32,560.00
Total overhead applied	$52,120.00	$49,360.00

Computation of manufacturing cost and cost per unit assigned to Job
Particulars	Job P	Job Q
Direct Material	$26,000.00	$14,500.00
Direct Labor	$31,400.00	$12,700.00
Manufacturing overhead	$52,120.00	$49,360.00
Total Manufacturing cost	$109,520.00	$76,560.00
Nos of units	20	30
Cost per unit	$5,476.00	$2,552.00

Solution e:

Computation of Total price and per unit price of job
Particulars	Job P	Job Q
Manufacturing Cost	$109,520.00	$76,560.00
Markup (80%)	$87,616.00	$61,248.00
Total price of job	$197,136.00	$137,808.00
Nos of units	20	30
Selling price per unit	$9,857	$4,594

solution f:

Cost of goods sold = $109,520 + $76,560 = $186,080