Question

Return to question 00 The Foundational 15 (LO2-1, LO2-2, LO2-3, LO2-4) [The following information applies to the questions displayed below. Part 8 of 15 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): 0.33 points 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 $11,500 $15,900 $27,400 $ 2.00 $ 2.80 Job P $19,000 $25,800 Job $11,000 $ 9,900 Direct materials Direct labor cost Actual machine-hours used: Molding Fabrication Total 2,300 1,200 3,500 1,400 1,500 2,900 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.

Answer 1

Cost of goods sold = $124,260

Cost of goods sold is the cost incurred for producing the goods sold. It includes, direct materials, direct labor and manufacturing overhead.

The manufacturing overhead is applied in the business on the basis of predetermined rate on machine hours.

Step 1:

Predetermined overhead rate = Estimated total manufacturing overhead / Estimated machine hours =

Estimated total manufacturing overhead = Estimated variable manufacturing overhead + Estimated fixed manufacturing overhead

= (2,500 × $2.00) + (1,500 × $2.80) + $27,400 = $36,600

Estimated machine hours = 4,000

Predetermined overhead rate = $36,600 / 4,000 = $9.15 per machine hour

Step 2:

Manufacturing overhead for Job P = Total machine hours × Predetermined overhead rate

= 3,500 × $9.15 = $32,025

Manufacturing overhead for Job Q = Total machine hours × Predetermined overhead rate

= 2,900 × $9.15 = $26,535

Step 3: Calculation of cost of goods sold:

Computation of manufacturing and cost of good sold Particulars Job P | Job Q Direct Material $19,000 $11,000 Direct Labor $25,800 $9,900 Manufacturing overhead $32,025 $26,535 Total Manufacturing cost $76,825 $47,435 Total cost of goods sold = $76,825 + $48,435 $124,260

Cost of goods sold includes the cost of direct labor, direct materials and manufacturing overhead.

Total cost of goods sold = $76,825 + $48,435 = $124,260