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): Estimated total machine-hours used Estimated total fixed manufacturing overhead Estimated variable manufacturing overhead per machine-hour Molding Fabrication Total 2,500 1,500 4,000 $10,000 $15,000 $25,000 $ 1.40 $ 2.20 Job P $13,000 $21,000 Job Q $8,000 $7,500 Direct materials Direct labor st Actual machine-hours used: Molding Fabrication Total 1,700 600 2,300 800 900 1,700 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. If Job Q included 30 units, what was its unit product cost?

2. 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?

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

Answer 1

Solution 1:

Predetermined overhead rate = Estimated total overhead / Estimated machine hours = (2500*$1.40 + 1500*$2.20 + $25,000) / 4000 = $7.95 per machine hour

Solution 2:
Computation of overhead applied - Plantwide overhead rate
Particulars	Job P	Job Q
Actual machine hours	2300	1700
Overhead rate	$7.95	$7.95
Overhead applied to jobs	$18,285.00	$13,515.00

Solution 3 to 6:
Compuatation of manufacturing cost assigned to Job P and Q
Particulars	Job P	Job Q
Direct Material	$13,000	$8,000
Direct Labor	$21,000	$7,500
Manufacturing overhead	$18,285	$13,515
Total Manufacturing cost	$52,285	$29,015
Compuatation of manufacturing cost and cost per unit assigned to Job
Particulars	Job P	Job Q
Total Manufacturing cost	$52,285.00	$29,015.00
Nos of units	20	30
Unit product cost	$2,614	$967

Solution 7:
Compuatation of Total price and per unit price of job
Particulars	Job P	Job Q
Manufacturing Cost	$52,285.00	$29,015.00
Markup (80%)	$41,828.00	$23,212.00
Total price of job	$94,113.00	$52,227.00
Nos of units	20	30
Selling price per unit	$4,706	$1,741

Solution 8:

Cost of goods sold for march = $52,285 + $29,015 = $81,300