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:

  

	Molding		Fabrication			Total
Machine-hours		30,000		40,000		70,000
Fixed manufacturing overhead costs	$	730,000	$	220,000	$	950,000
Variable manufacturing overhead cost per machine-hour	$	5.50	$	5.50

  

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:	Molding		Fabrication		Total
Direct materials cost	$	371,000	$	321,000	$	692,000
Direct labor cost	$	240,000	$	140,000	$	380,000
Machine-hours		21,000		9,000		30,000

  

Job C-200:	Molding		Fabrication		Total
Direct materials cost	$	250,000	$	280,000	$	530,000
Direct labor cost	$	120,000	$	290,000	$	410,000
Machine-hours		9,000		31,000		40,000

Upton and Verlander had no underapplied or overapplied manufacturing overhead during the year.

Required:

1. Assume Upton and Verlander uses a plantwide predetermined overhead rate based on machine-hours.

a. Compute the plantwide predetermined overhead rate.

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 150% of total manufacturing cost, 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?

Answer 1

Answers

• All working forms part of the answer
• Requirement 1

Part A

A	Variable Overhead rate	$                              5.50	$                             5.50
B	Total machine hours	30,000	40,000	70,000
C = A x B	Total Variable Overhead	$                       165,000	$                      220,000	$                385,000
D	Total Fixed Overheads	$                       730,000	$                      220,000	$                950,000
E = C+D	Total manufacturing Overhead			$            1,335,000
F	Total machine hours			70,000
G = E/F	Plant Wide Overhead rate			$                    19.07	Answer

Part B

	Job D 70	Job C 200
Molding Department:
Direct material cost	$                       371,000	$                      250,000
Direct Labor cost	$                       240,000	$                      120,000
Manufacturing Overhead	$                       400,470	$                      171,630
Fabrication Department:
Direct material cost	$                       321,000	$                      280,000
Direct Labor cost	$                       140,000	$                      290,000
Manufacturing Overhead	$                       171,630	$                      591,170
Total manufacturing cost assigned	$                   1,644,100	$                  1,702,800	ANSWERS

Part C

		Job D 70	Job C 200
A	Total manufacturing cost assigned	$                   1,644,100	$                  1,702,800
B = A x 150%	Bid Price	$                   2,466,150	$                  2,554,200

Part D

Total manufacturing cost assigned
Job D 70	$                   1,644,100
Job C 200	$                   1,702,800
Cost of Goods Sold	$                   3,346,900