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):

	Molding			Fabrication			Total
Estimated total machine-hours used		2,500			1,500			4,000
Estimated total fixed manufacturing overhead	$	10,000		$	15,000		$	25,000
Estimated variable manufacturing overhead per machine-hour	$	1.40		$	2.20

	Job P			Job Q
Direct materials	$	13,000		$	8,000
Direct labor cost	$	21,000		$	7,500
Actual machine-hours used:
Molding		1,700			800
Fabrication		600			900
Total		2,300			1,700

1.)What was the company’s plantwide predetermined overhead rate?

2.)How much manufacturing overhead was applied to Job P and how much was applied to Job Q?

3.)What was the total manufacturing cost assigned to Job P?

4.)If Job P included 20 units, what was its unit product cost?

5.)What was the total manufacturing cost assigned to Job Q?

6.)If Job Q included 30 units, what was its unit product cost?

7.)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?

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

Answer 1

Answer 1.

Molding Department:

Estimated manufacturing overhead = Estimated variable manufacturing overhead per machine hour * Estimated machine hours + Estimated fixed manufacturing overhead
Estimated manufacturing overhead = $1.40 * 2,500 + $10,000
Estimated manufacturing overhead = $13,500

Fabricating Department:

Estimated manufacturing overhead = Estimated variable manufacturing overhead per machine hour * Estimated machine hours + Estimated fixed manufacturing overhead
Estimated manufacturing overhead = $2.20 * 1,500 + $15,000
Estimated manufacturing overhead = $18,300

Total estimated manufacturing overhead = $13,500 + $18,300
Total estimated manufacturing overhead = $31,800

Predetermined overhead rate = Total estimated manufacturing overhead / Total estimated machine hours
Predetermined overhead rate = $31,800 / 4,000
Predetermined overhead rate = $7.95 per machine hour

Answer 2.

Job P:

Manufacturing overhead applied = Predetermined overhead rate * Actual machine hours
Manufacturing overhead applied = $7.95 * 2,300
Manufacturing overhead applied = $18,285

Job Q:

Manufacturing overhead applied = Predetermined overhead rate * Actual machine hours
Manufacturing overhead applied = $7.95 * 1,700
Manufacturing overhead applied = $13,515

Answer 3.

Job P:

Total manufacturing cost = Direct materials + Direct labor + Manufacturing overhead applied
Total manufacturing cost = $13,000 + $21,000 + $18,285
Total manufacturing cost = $52,285

Answer 4.

Job P:

Unit product cost = Total manufacturing cost / Units produced
Unit product cost = $52,285 / 20
Unit product cost = $2,614

Answer 5.

Job Q:

Total manufacturing cost = Direct materials + Direct labor + Manufacturing overhead applied
Total manufacturing cost = $8,000 + $7,500 + $13,515
Total manufacturing cost = $29,015

Answer 6.

Job Q:

Unit product cost = Total manufacturing cost / Units produced
Unit product cost = $29,015 / 30
Unit product cost = $967

Answer 7.

Job P:

Total price = Manufacturing cost + Markup
Total price = $52,285 + 80% * $52,285
Total price = $94,113

Selling price per unit = Total price / Units sold
Selling price per unit = $94,113 / 20
Selling price per unit = $4,706

Job Q:

Total price = Manufacturing cost + Markup
Total price = $29,015 + 80% * $29,015
Total price = $52,227

Selling price per unit = Total price / Units sold
Selling price per unit = $52,227 / 30
Selling price per unit = $1,741

Answer 8.

Cost of goods sold = Manufacturing cost for Job P + Manufacturing cost for Job Q
Cost of goods sold = $52,285 + $29,015
Cost of goods sold = $81,300