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 Molding Fabrication Total 2,500 1,500 4,000 Estimated total fixed manufacturing overhead $13,250 $16,950 $30, 200 Estimated variable manufacturing overhead per machine-hour $ 3.50 $ 2.70 Job P Job $26,000 $14,500 $31,400 512,700 Direct materials Direct labor cost Actual machine-hours used: Molding Fabrication Total 3,000 1,900 4,900 2,100 2,200 4,300 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. 3. What was the total manufacturing cost assigned to Job P? (Do not round Intermediate calculations.) Total manufacturing cost

Answer 1

Solution:

Calculation of Total Manufacturing Cost assigned to Job P:

Total Cost to Job P = Direct Material of Job P + Direct Labor of Job P + Manufacturing Overhead applied to Job P

= $26,000 + $31,400 + $51,695

= $109,095

Working:

Here Manufacturing Overhead applied = Overhead Rate per machine hour * Total actual machine hour used

= $10.55 * 4,900 hours

= $51,695

Where,

overhead rate per machine hour = Total Estimated Overhead / Total estimated machine hours

= [($30,200) + (2,500Hr *$2.7 + 1,500 Hr *$3.5)] / 4000 hours

= (30,200 + 6,750 + 5,250) / 4000 hours

= $10.55 per machine hours