Question

Exercise 4-15 Plantwide and Departmental Overhead Rates: Job Costs [LO4-1, L04-2, L04-3] The following information applies to the questions displayed below. 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 32,000 42.000 74,000 Fixed manufacturing overhead costs $760,000 $200,000 $960,000 Variable manufacturing overhead per machine S 50 $ 5.00 hour 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 $ 377,000 $324,000 $ 701,000 Direct labor cost $ 210,000 $ 130,000 $340,000 Machine-hours 22,000 10,000 32,000 Job C-100: Direct materials cost Direct labor cost Machine-hours Molding Fabrication Total $ 290,000 $ 210,000 $500,000 $ 170.000 S 300,000 $470.000 10,000 32,000 42.000 Smithson had no overapplied or underapplied manufacturing overhead during the year. References Section Break Exercise 4-15 Plantwide and Departmental Overhead Rates: Job Costs [LO4- 1. LO4-2, LO4-3)

Answer 1

2a) Departmental overhead rate :

Molding Department = (760000/32000+5) = 28.75 per hour

Fabrication department = (200000+42000+5) = 9.76 per hour

2b) Total manufacturing cost

	Job D-75	Job C-100
Direct material	701000	500000
Direct labor	340000	470000
Molding overhead	22000*28.75 = 632500	10000*28.75 = 287500
Fabrication overhead	10000*9.76 = 97600	32000*9.76 = 312320
Total manufacturing cost	1771100	1569820

2c) Bid price

Job D-75 = 1771100*1.2 = 2125320

Job C-100 = 1569820*1.2 = 1883784

2d) Cost of goods sold = 1771100+1569820 = 3340920