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): Molding Fabrication Total Estimated total machine-hours used 2,500 1,500 4,000 Estimated total fixed manufacturing overhead $ 12,500 $ 16,500 $ 29,000 Estimated variable manufacturing overhead per machine-hour $ 2.40 $ 3.20 ________________________________________ Job P Job Q Direct materials $ 23,000 $ 13,000 Direct labor cost $ 29,000 $ 11,500 Actual machine-hours used: Molding 2,700 1,800 Fabrication 1,600 1,900 Total 4,300 3,700 ________________________________________ 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. 1. What was the company’s plantwide predetermined overhead rate? 2. How much manufacturing overhead was applied to Job P and how 3. What was the total manufacturing cost assigned to Job P? 4. If Job P included 20 units, what was its unit product cost? 5. What was the total manufacturing cost assigned to Job Q? 6. If Job Q included 30 units, what was its unit product cost? 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? 8. What was Sweeten Company’s cost of goods sold for March? 9. What were the company’s predetermined overhead rates in the Molding Department and the Fabrication Department? 10. How much manufacturing overhead was applied from the Molding Department to Job P and how much was applied to Job Q? 11. How much manufacturing overhead was applied from the Fabrication Department to Job P and how much was applied to Job Q? 12. If Job P included 20 units, what was its unit product cost? 13. If Job Q included 30 units, what was its unit product cost? 14. 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? 15. What was Sweeten Company’s cost of goods sold for March?

Answer 1

Question1

Plant wise pre - determined overhead rate = Total Fixed mfg OHDS / Total number of estimated machine hours

= 29000/4000 = $7.25

Question 2

Mfg OHDS applied to Job P and Job Q

Particulars	JOb P	Job Q
Variable OHDS
Molding	$6480 (2700 hours *2.4)	$4320 (1800 hours *2.4)
Fabrication	$5120 (1600 hours *3.2)	$6080 (1900 hours *3.2)
Fixed OHDS
Molding	$19575 (2700 hours *7.25)	$13050 (1800 hours *7.25)
Fabrication	$11600 (1600 hours *7.25)	$13775 (1900 hours *7.25)
Total	$42775	$37225

Question 3

Total Manufacturing cost asssigned to Job P is $42775

Question 4

Particulars	Amount
Direct Material	$23000
Direct Labour	$29000
Manufacturing OHDS	$42775
Total Cost (A)	$94775
Number of units (B)	20
Cost per unit (A)/(B)	$4738.75

Question 5

Total Manufacturing cost asssigned to Job Q is $37225

Question 6

Particulars	Amount
Direct Material	$13000
Direct Labour	$11500
Manufacturing OHDS	$37225
Total Cost (A)	$61725
Number of units (B)	30
Cost per unit (A)/(B)	$2057.5

Question 7

Job P

Particulars	Amount
Total cost	$94775
Mark up (80% on Mfg cost )	$75820 (94775*80%)
Selling Price	$170595
Number of units (B)	20
Sale price per unit (A)/(B)	$8529.75

Job Q

Particulars	Amount
Total cost	$61725
Mark up (80% )	$49380 (61725*80%)
Selling Price	$111105
Number of units (B)	30
Sale price per unit (A)/(B)	$3703.5

Question 8

Total Cost of Goods sold for March =Total manufacturing Cost of Job P + total manufacturing Cost of Job Q

= $94775 +$ 61725 = $156500

Question 9

Departmental Overheads

Particulars	Molding	Fabrication
Fixed manufacturing Overhead	$12500	$16500
Variable manufacturing Overhead	$6000 (2500 hours *2.4)	$4800 (1500 hours *3.2)
Total manufacturing Overhead (A)	$18500	$21300
Number of machine hours (B)	2500	1500
Overhead rate per machine hour (A)/(B)	$7.4	$14.2

Question 10

Application of Moulding Department to JOb P and Job Q

Particulars	Job P	Job Q
Actual Machine hours (A)	2700	1800
Overhead rate (B)	$7.4	$7.4
Total manufacturing Overhead (A) *(B)	$19980	$13320

Question 11

Application of Fabrication Department to JOb P and Job Q

Particulars	Job P	Job Q
Actual Machine hours (A)	1600	1900
Overhead rate (B)	$14.2	$14.2
Total manufacturing Overhead (A) *(B)	$22720	$26980

Question 12 AND 13

Particulars	Job P	Job Q
Direct Material	$23000	$13000
Direct Labour	$29000	$11500
Manufacturing OHDS
Moulding	$19980	$13320
Fabrication	$22720	$26980
Total Manufacturing Cost (A)	94700	64800
Number of units (B)	20	30
Cost per unit (A)/(B)	$4735	$2160

Question 14

Particulars	Job P	Job Q
Total cost	$94700	$64800
Mark up (80% )	$75760	$51840
Selling Price (A)	$170460	$116640
Number of units (B)	20	30
Sale price per unit (A)/(B)	$8523	$3888

Question 15

Total Cost of Goods sold for March = Total cost of Job P + Job Q

= $94700 + $64800 = $159500