Question

The Foundational 15 [LO2-1, LO2-2, LO2-3, LO2-4]

[The following information applies to the questions displayed below.]

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):

	Molding			Fabrication			Total
Estimated total machine-hours used		2,500			1,500			4,000
Estimated total fixed manufacturing overhead	$	14,250		$	17,550		$	31,800
Estimated variable manufacturing overhead per machine-hour	$	3.10		$	3.90

	Job P			Job Q
Direct materials	$	30,000		$	16,500
Direct labor cost	$	34,600		$	14,300
Actual machine-hours used:
Molding		3,400			2,500
Fabrication		2,300			2,600
Total		5,700			5,100

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.

Foundational 2-1

1. What was the company’s plantwide predetermined overhead rate?

Answer 1

1. Computation of company’s plantwide predetermined overhead rate with machine-hours as the allocation base:-
Computation of Estimated Total manufacturing overhead cost:-
		Molding		Fabrication	Total
a	Estimated total machine-hours used	2500		1,500	4,000
b	Estimated variable manufacturing overhead per machine-hour	$                                   3.10		$                    3.90
c	Variable manufacturing overhead cost (a*b)	$                                 7,750		$                  5,850	$                          13,600
d	Estimated total fixed manufacturing overhead	$                               14,250		$                17,550	$                          31,800
e	Estimated Total manufacturing overhead cost (c+d)	$                               22,000		$                23,400	$                          45,400

Plantwide Predetermined overhead rate     =	Estimated Total manufacturing overhead cost			=	$45,400	=	$11.35	per machine hour
	Estimated Total machine hours				4000

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