Question

Foundational 15 si connect LO2-1, LO2-2, LO2-3, LO2-4 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 Estimated total machine-hours used............. Estimated total fixed manufacturing overhead .... Estimated variable manufacturing overhead per machine-hour ......................... Molding 2.500 $10,000 Fabrication 1.500 $15,000 Total 4.000 $25,000 $1.40 $2.20

Answer 1

Sweeten Company

Plantwide Predetermined Overhead Rate

1. Plantwide predetermined overhead rate is used to apply manufacturing overhead to products or job orders and is usually computed at the beginning of each period by dividing the estimated manufacturing overhead cost both variable and fixed by an allocation base (also known as activity base or activity driver). Commonly used allocation bases are direct labor hours, direct labor dollars, machine hours, and direct materials.

Estimated variable manufacturing overhead

Molding (2500*$1.40)                        3500

Fabrication (1500*2.20)                     3300

Total variable overheads                                            6800

Total fixed overheads                                                 25000

Total Overheads of Plant                                            31800

Total machine-hours used                                          4000

Pre-determined overheads rate                                 $7.95

2. Manufacturing overhead applied                               Job P                Job Q

Total machine hours                                                   2600                1300

Overhead rate per MH                                               $7.95               $7.95

Overheads applied                                                      20670              10335

3. Total manufacturing cost assigned to Job P

Material cost                                      $15000

Labor cost                                           20000

Overheads applied                              20670

Total manufacturing cost                   $55670

4. If Job P included 20 units

Total manufacturing cost                   $55670

Dividend by total units                        20

Units cost                                            $2783.5

5. Total manufacturing cost assigned to Job Q

Material cost                                      $10000

Labor cost                                           7000

Overheads applied                              10335

Total manufacturing cost                   $27335

6. If Job Q included 30 units

Total manufacturing cost                   $27335

Dividend by total units                        30

Units cost                                            $911.17

7. Cost-plus pricing (markup percentage of 80% of total manufacturing cost)

Job P                            Job Q

Total manufacturing cost                   $55670                        $27335

Add: Mark up @80% of cost               44536                          21868

Total Sales price of Jobs                     100206                        49203

Number of units                                  20                                30

Selling price per unit                          $5010.3                       $1640.1

8. Company’s cost of goods sold for March

Total manufacturing cost

Job P                                        $55670

Job Q                                       $27335

Total cost of goods sold          $83005

Departmental Predetermined Overhead Rate

9. Departmental predetermined overhead rate is used to apply manufacturing overhead to products or job by evaluating the costs associated with maintaining a department. The rate takes into account both direct and indirect costs associated to the particular department and period to manufacture the product.

Molding                       Fabrication

            Total Fixed overheads                                     10000                          15000

            Number of MH                                                2500                            1500

Fixed OH per MH                                            $4                                $10

Variable OH per MH                                       $1.40                           $2.20

Total Department OH per MH                       $5.40                           $12.20

10. Manufacturing overhead applied to Job P and Job Q from Molding department

Job P                Job Q

            Molding Deptt. MH used                    1800                700

            Overheads rate of Molding                $5.40               $5.40

            Overheads of Molding applied           9720                3780

11. Manufacturing overhead applied to Job P and Job Q from Fabrication department

Job P                Job Q

            Fabrication Deptt. MH used                           800                  600

Overheads rate of fabrication                        $12.20             $12.20

Overheads of fabrication applied                   9760                7320

12. Unit product cost of Job P

Material cost                                                              15000

Labor cost                                                                   20000

Overheads applied:

Molding                                               9720

Fabrication                                          9760                19480

Total manufacturing Cost                                           54480

Number of units                                                          20

Unit cost of Job P                                                        $2724

13. Unit product cost of Job Q

Material cost                                                              10000

Labor cost                                                                   7000

Overheads applied:

Molding                                               3780

Fabrication                                          7320                11100

Total manufacturing Cost                                           28100

Number of units                                                          30

Unit cost of Job P                                                        $936.67

14. Cost-plus pricing (markup percentage of 80% of total manufacturing cost)

Job P                            Job Q

Total manufacturing cost                   $54480                        $28100

Add: Mark up @80% of cost               43584                          22480

Total Sales price of Jobs                     98064                          50580

Number of units                                  20                                30

Selling price per unit                          $4903.2                       $1686

15. Cost of goods sold for March

Total manufacturing cost of Job P      54480             

Total manufacturing cost of Job Q     28100

Total Cost of Goods sold                     $82580