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 O $8,000 $7,500 Direct materials Direct labor cost 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.

Answer 1

Total Estimated Variable manufacturing overhead              = ( 2,500 x $ 1.40 ) + ( 1,500 x $ 2.20 )              =   $ 3,500 + $ 3,300              =   $ 6,800

Plant wide Predetermined Overhead rate    =   Est. Manf. overhead / Est. Total machine hours    =     ( $ 25,000 + $ 6,800 ) / 4,000 MH    =     $ 31,800 / 4,000    =   $ 7.95

Particulars	Job P	Job Q
Direct Materials	$ 13,000	$ 8,000
Direct Labor cost	$ 21,000	$ 7,500
Applied Manufacturing overhead	$ 18,285 ( 2,300 x $ 7.95 )	$ 13,515 ( 1,700 x $ 7.95 )
Total Manufacturing cost	$ 52,285	$ 29,015
Add: Mark Up - 80%	$ 41,828	$ 23,212
Total price for the job	$ 94,113	$ 52,227
Divided by Number of Units Produced	20 units	30 Units
Selling price per unit	$ 4,706 ( $ 94,113 / 20 units)	$ 1,741 ( $ 52,227 / 30 units )