Question

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 Fabrication Total 29,000 39,000 68,000 $ 770,000 $260,000 $1,030,000 $ 5.90 $ 5.90 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 Fabric on Total $ 372,000 $ 327,000 $ 699,000 $ 220,000 $ 170,000 $390,000 21,000 8,000 29,000 Job C-200: Direct materials cost Direct labor cost Machine-hours Molding Fabrication Total $ 250,000 $ 250,000 $500,000 $ 180,000 $ 230,000 $ 410,000 8,000 31,000 39,000 Upton and Verlander had no underapplied or overapplied manufacturing overhead during the year. 2. Assume Upton and Verlander uses departmental predetermined overhead rates based on machine-hours. a. Compute the departmental predetermined overhead rates. 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 130% of total manufacturing costs, what bid 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?

2A: Predetermined overhead rates

Molding Department _____ per MH

Fabrication Department _____ per MH

2B: Total manufacturing costs

Job D-70 _____

Job C-200 _____

2C: Bid price

Job D-70 _____

Job C-200 _____

2D: Cost of goods sold = $3,430,400

Answer 1

2a) Computation of Predetermined overhead rate

Calculation of Departmentwide Predetermined Overhead Rate

Overhead Rate = Total Fixed Manufacturing Expenses / Total Machine Hours + Variable Rate per Hour

For Molding = $ 770000 / 29000 hours + $ 5.90 = $ 26.55 + $ 5.90 = $ 32.45 per Machine Hour

For Fabrication = $ 260000 / 39000 hours + $ 5.90 = $ 6.67 + $ 5.90 = $ 12.57 per Machine Hour

Molding Department = $ 32.45 per Machine Hour

Fabrication   Department =  $ 12.57 per Machine Hour

2b) Computation of Total manufacturing cost

Particulars	Job D-70	Job C-200
Direct materials cost
Molding	372000	250000
Fabrication	327000	250000
Direct labor cost
Molding	220000	180000
Fabrication	170000	230000
Overhead applied
Molding	681450	259600
Fabrication	100560	389670
Total manufacturing cost	$ 1871010	$ 1559270

Overhead applied = Machine Hours x Predetermined overhead rate

Job D-70

Molding = 21000 hours x $ 32.45 = $ 681450

Fabrication = 8000 hours x $ 12.57 = $ 100560

Job C-200

Molding = 8000 hours x $ 32.45 = $ 259600

Fabrication = 31000 hours x $ 12.57 = $ 389670

2c) Computation of Bid prices

Upton and Verlander establishes bid prices that are 130% of total manufacturing cost

Particulars	Job D-70	Job C-200
Total manufacturing cost	$ 1871010	$ 1559270
Add: Markup @30%	$ 561303	$ 467781
Bid prices	$ 2432313	$ 2027051

2d) Computation of Cost of goods sold

Total manufacturing cost Job D-70 = $ 1871010

Total manufacturing cost Job C-200 = $ 1559270

Cost of goods sold = Total manufacturing cost Job D-70 + Total manufacturing cost Job C-200 = $ 1871010 + $ 1559270 = $ 3430280

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