Question

Smithson Company uses a job-order costing system and has two manufacturing departments—Molding and Fabrication. The company provided the following estimates at the beginning of the year: Molding Fabrication Total Machine-hours 23,000 33,000 56,000 Fixed manufacturing overhead costs $ 730,000 $ 220,000 $ 950,000 Variable manufacturing overhead per machine-hour $ 5.00 $ 5.00 During the year, the company had no beginning or ending inventories and it started, completed, and sold only two jobs—Job D-75 and Job C-100. It provided the following information related to those two jobs: Job D-75: Molding Fabrication Total Direct materials cost $ 377,000 $ 329,000 $ 706,000 Direct labor cost $ 210,000 $ 170,000 $ 380,000 Machine-hours 18,000 5,000 23,000 Job C-100: Molding Fabrication Total Direct materials cost $ 280,000 $ 290,000 $ 570,000 Direct labor cost $ 100,000 $ 220,000 $ 320,000 Machine-hours 5,000 28,000 33,000 Smithson had no overapplied or underapplied manufacturing overhead during the year. 3.value: 1.66 pointsRequired information Assume Smithson uses a plantwide overhead rate based on machine-hours. Required: 1-a. Compute the predetermined plantwide overhead rate. (Round your answer to 2 decimal places.) 1-b. Compute the total manufacturing costs assigned to Job D-75 and Job C-100. (Round your intermediate calculations to 2 decimal places.) 1-c. If Smithson establishes bid prices that are 120% of total manufacturing costs, what bid price would it have established for Job D-75 and Job C-100? (Round your intermediate calculations to 2 decimal places.) 1-d. What is Smithson’s cost of goods sold for the year? (Round your intermediate calculations to 2 decimal places.)

Answer 1

Answer

• All working forms part of the answer
• Requirement 1 ‘a’

Working		Molding Department:	Fabrication Department:	Total
A	Variable Overhead rate	$                 5.00	$                        5.00
B	Total machine hours	23,000	33,000	56,000
C = A x B	Total Variable Overhead	$          115,000	$                 165,000	$             280,000
D	Total Fixed Overheads	$          730,000	$                 220,000	$             950,000
E = C+D	Total manufacturing Overhead			$          1,230,000
F	Total machine hours			56,000
G = E/F	Plant Wide Overhead rate			$                  21.96 = Answer

• Requirement 1 ‘b’

	Job D 75	Job C 100
Molding Department:
Direct material cost	$          377,000	$                 280,000
Direct Labor cost	$          210,000	$                 100,000
Manufacturing Overhead	$          395,280	$                 109,800
Fabrication Department:
Direct material cost	$          329,000	$                 290,000
Direct Labor cost	$          170,000	$                 220,000
Manufacturing Overhead	$          109,800	$                 614,880
Total manufacturing cost assigned	$      1,591,080 = Answer	$             1,614,680 = Answer

• Requirement 1 ‘c’

		Job D 75	Job C 100
A	Total manufacturing cost assigned	$                              1,591,080	$     1,614,680
B = A x 120%	Bid Price	$                              1,909,296	$     1,937,616

• Requirement 1 ‘d’

Cost of Goods Sold = 1591080 + 1614680 = $ 3,205,760