Question

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 $13,250 $16,95€ $30,200 $ 2.70 $ 3.50 Job P $26,000 $31,400 Job $14,500 $12,700 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. 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? (DO not round intermediate calculations. Round your final answers to nearest whole dollar.) Job P Job Q Total price for the job Selling price per unit

Answer 1

Ans:

1. Calculation of Plantwide Predetermined Overhead Rate:

Pre determined Overhead Rate= Estimated Fixed Manufacturing Overhead/ Estimated Machine hours

=$30200/4000

=$7.55

2. Calculation of Manufacturing overheads applied to Job P and Q:

	Job P	Job Q
Variable manufacturing overhead: Holding [3000 * $2.7] [2100*$2.7]	$8100	$5670
Variable manufacturing overhead: Fabrication [1900 * $3.5] [2200*$3.5]	$6650	$7700
Fixed Manufacturing Overhead [4900* $7.55] [4300*$7.55]	$36995	$32465
Total Manufacturing Overheads applied	$51745	$45835

3. Calculation of total manufacturing costs assignd to Job p and Q:

	Job P	Job Q
Direct Material	$26000	$14500
Direct labour cost	$31400	$12700
Total manufacturing overhead applied (see calculation in point 2)	$51745	$45835
Total manufacturing cost assigned to jobs	$109145	$73035

4.If Job P includes 20 units and Job Q includes 30 units, calculation of unit product cost:

		Job P	Job Q
1	Total manufacturing cost assigned (See point 3)	$109145	$73035
2	No. of Units	20	30
3	Unit Product cost (1/2)	$5457.25	$2434.5

5. If company uses cost plus pricing method of 80% mark up to total manufacturing costs, the selling Price would be:

	Job P	Job Q
Total manufacturing cost assigned (See point 3)	$109145	$73035
Add: Mark-Up of 80% of total manufacturing costs	$87316	$58428
Total Sales Value	$196461	$131463
No. of Units	20	30
Selling Price per unit	$9823.05	$4382.1

Therefore, Final answers are:

	Job P	Job Q
Total Manufacturing cost for the job	$109145	$73035
Total Price for the Job	$196461	$131463
Selling Price per unit	$9823.05	$4382.1