Question

[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. It started only two jobs during March—Job P and Job Q. Job P was completed and sold by the end of the March and Job Q was incomplete at the end of the March. The company uses a plantwide predetermined overhead rate based on direct labor-hours. 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 fixed manufacturing overhead $ 14,000 Estimated variable manufacturing overhead per direct labor-hour $ 1.40 Estimated total direct labor-hours to be worked 3,500 Total actual manufacturing overhead costs incurred $ 19,000

	Job P	Job Q
Direct materials	15,000	9500
Direct labor cost	52,000	15,000
Actual direct labor-hours worked	2,600	750

Required information

4-a. If Job P includes 40 units, what is its unit product cost?

4-b. What is the total amount of manufacturing cost assigned to Job Q as of the end of March (including applied overhead)?

Answer 1

Step 1 Calculate Plantwide Predetermined Overhead Rate Add Estimated total fixed manufacturing overhead Estimated Variable overhead cost Estimated Total Overhead $ $ $ 14,000 Given 4,900 3500 * $ 1.40 18,900 Estimated hour *Estimated Variable OH per hour Predetermined Overhead Rate = = $ 5.40 Estimated total Overhead Estimated Total direct labor hour 18900 3500 Divide estimated Total Oh calculated above with estimated total machine direct labor hours given in question. Step 2 Manufacturing overhead applied to Job P Manufacturing overhead Applied (Job P) X = $ 14,040 Predetermined Overhead Rate 5.40 Actual Direct labor hours 2600 Manufacturing overhead Applied (Job Q) 0 $ 4,050 Divide estimated Total Oh calcux 5.40 Actual Direct labor hours 750 X First we calculated predetermined rate by dividing estimated cost by estimated direct labor hour. Than we multiplied this predetermined rate by actual total direct labor hours used. Step 3 Total manufacturing cost assigned to Job P. Add Add Direct Material terial Direct Labor Manufacturing Overhead Total manufacturing Cost $ $ $ $ 15,000 Given 52,000 Given 14,040 calculated in Step 2 81,040 To calculate manufacturing cost add direct material, direct labour and manufacturing overhead. 4. a Unit product cost of Job P If it included 20 units Total Manufacturing Cost Total Units Unit Product Cost (a) (b) (a)/(b) $ 81,040 40 $ 2,026.00 Divide Manufacturing cost (calculated in step 3 by) 40 to get unit cost of product. 4.b Total manufacturing cost assigned to Job Q. Direct Material Direct Labor Manufacturing Overhead Total manufacturing Cost $ $ $ $ 9,500 Given 15,000 Given 4,050 calculated in Step 2 28,550 To calculate manufacturing cost add direct material, direct labour and manufacturing overhead (calculated in above step 2).