Question

Z Seved Help Save & E neyMCU HUIFFOLUI! [The following information applies to the questions displayed below.) Upton and Verlander Company uses a job-order costing system. Upton and Verlander has two manufacturing departments-Molding and Fabrication. Upton and Verlander provided the following estimates at the beginning of the year: Machine-hours Fixed manufacturing overhead costs Variable manufacturing overhead cost per machine-hour Molding Pabrication 28,000 38,000 $ 780,000 $ 230,000 $ 5.20 $ 5.20 Total 66,000 $1,010,000 During the year, the company had no beginning or ending inventories and it started, completed, and sold only two jobs- Job D-70 and Job C-200. It provided the following information related to those two jobs: Job D-70: Direct materials cost Direct labor cost Machine-hours Molding Fabrication Total $ 371,000 $325,000 $ 696,000 $ 210,000 $ 160,000 $ 370,000 21,000 7,000 28,000 Job C-200: Direct materials cost Direct labor cost Machine-hours Molding Fabrication Total $ 240,000 $ 200,000 $ 440,000 $ 150,000 $ 280,000 $430,000 7,000 31,000 38,000 Upton and Verlander had no underapplied or overapplied manufacturing overhead during the year. Required: 1. Assume Upton and Verlander uses a plantwide predetermined overhead rate based on machine-hours. a. Compute the plantwide predetermined overhead rate. b. Compute the total manufacturing cost assigned to Job D-70 and Job C-200. c. If Upton and Verlander establishes bid prices that are 140% of total manufacturing cost, what bld prices would it have established for Job D-70 and Job C-200? d. What is Upton and Verlander's cost of goods sold for the year?

Answer 1

Solution 1 (a):

Computation of predetermined overhead rate based on machine hours is shown below:

Estimated variable manufacturing overhead	$ 3,43,200 [(28,000 hrs*$ 5.20) +(38,000 hrs *$ 5.20)]
Estimated fixed overhead	$ 10,10,000 [($ 7,80,000+$ 2,30,000)]
Total estimated overhead	$ 13,53,200 ($ 3,43,200 +$ 10,10,000)
Estimated machine hours	66,000 machine hours (28,000 machine hours + 38,000 machine hours)

Predetermined overhead rate                     = Total estimated overhead / Estimated machine hours

Predetermined overhead rate                         = $ 13,53,200 / 66,000 machine hours

Predetermined overhead rate                      = $ 20.50 per machine hour

Solution 1 (b):

Computation of total manufacturing cost assigned to Job D-70 and Job C – 200

Particulars	Job D-70	Job C -200
Direct materials cost	$ 6,96,000	$ 4,40,000
Direct labor cost	$ 3,70,000	$ 4,30,000
Overhead applied (Working notes)	$ 5,74,000	$ 7,79,000
Total manufacturing cost	$ 16,40,000	$ 16,49,000

Working notes

Computation overhead applied

Particulars	Job D-70	Job C-200
Overhead applied	$ 5,74,000 (28,000 machine hours *$ 20.50)	$ 7,79,000 (38,000 machine hours *$ 20.50)

Solution 1 (c) :

Computation of bid prices for Job D-70 and Job C -200

Particulars	Job D -70	Job C -200
Total manufacturing cost	$ 16,40,000	$ 16,49,000
Add: Markup @40%	$ 6,56,000 ($ 16,40,000*40%)	$ 6,59,600 ($ 16,49,000*40%)
Bid prices	$ 22,96,000	$ 23,08,600

Solution 1 (d)

In the above question  the company has no beginning and ending inventory and only Job D-70 and Job C-200 were started, completed and sold during the year, the cost of goods sold is equal to to the manufacturing costs assigned to both the jobs :

Particulars	Amount in $
Total manufacturing cost Job D-70	$ 16,40,000
Total manufacturing cost Job C-200	$ 16,49,000
Cost of goods sold	$ 32,89,000 ($ 16,40,000+$ 16,49,000)

Thank you !!!!!!!