Question

Required information [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. 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 evende per machine-hour Molding Fabrication Total 2,500 1,500 4,000 $10,500 $15,300 $25,800 $ 1.60 $ 2.40 Job P $15,000 $22,600 Job O $9,000 $8,300 Direct materials Direct labor cost Actual machine-hours used: Molding Fabrication Total 1,900 800 2,700 1,000 1,100 2,100 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. 1. What was the company's plantwide predetermined overhead rate? (Round your answer to 2 decimal places.) Predetermined overhead rate per MH

Answer 1

Predetermined Overhead rate

Estimated total fixed manufacturing overhead cost = $25,800

Estimated total variable manufacturing overhead cost = [2,500 MH x $1.60] + [1,500 MH x $2.40]

= $4,000 + $3,600

= $7,600

Total estimated manufacturing overhead = Estimated total fixed manufacturing overhead cost + Estimated total variable manufacturing overhead cost

= $25,800 + $7,600

= $33,400

Therefore, the Predetermined Overhead rate = Total estimated manufacturing overhead / Total estimated machine hours

= $33,400 / 4,000 Machine hours

= $8.35 per Machine hour

“Hence, the Predetermined Overhead rate will be $8.35”