Question

Required information

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	$	11,000		$	15,600		$	26,600
Estimated variable manufacturing overhead per machine-hour	$	1.80		$	2.60

	Job P			Job Q
Direct materials	$	17,000		$	10,000
Direct labor cost	$	24,200		$	9,100
Actual machine-hours used:
Molding		2,100			1,200
Fabrication		1,000			1,300
Total		3,100			2,500

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 2-8

8. What was Sweeten Company’s cost of goods sold for March? (Do not round intermediate calculations.)

9. What were the company’s predetermined overhead rates in the Molding Department and the Fabrication Department? (Round your answers to 2 decimal places.)

10. How much manufacturing overhead was applied from the Molding Department to Job P and how much was applied to Job Q? (Do not round intermediate calculations.)

11. How much manufacturing overhead was applied from the Fabrication Department to Job P and how much was applied to Job Q? (Do not round intermediate calculations.)

12. If Job P included 20 units, what was its unit product cost? (Do not round intermediate calculations.)

13. If Job Q included 30 units, what was its unit product cost? (Do not round intermediate calculations. Round your final answer to nearest whole dollar.)

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? (Do not round intermediate calculations. Round your final answer to nearest whole dollar.)

15. What was Sweeten Company’s cost of goods sold for March? (Do not round intermediate calculations.)

Answer 1

Solution 8:

Predetermined overhead rate = Estimated overhead / Estimated direct labor hours

= ($26,600 + 2500*$1.80 + 1500*$2.60) /4000 = $8.75 per hour

Compuatation of manufacturing cost assigned to Job (Predetermined overhead rate)
Particulars	Job P	Job Q
Direct Material	$17,000.00	$10,000.00
Direct Labor	$24,200.00	$9,100.00
Manufacturing overhead	$27,125.00	$21,875.00
Total Manufacturing cost	$68,325.00	$40,975.00

Cost of goods sold for march = $68,325 + $40,975 = $109,300

Solution 9:

Computation of departmental overhead rates
Particulars	Molding	Fabrication
Fixed manufacturing overhead	$11,000	$15,600
Variable manufacturing overhead	$4,500	$3,900
Total manufacturing overhead	$15,500	$19,500
Nos of machine hours	$2,500	$1,500
Overhead rate per machine hour	$6.20	$13.00

Solution 10:

Computation of overhead applied from Molding department
Particulars	Job P	Job Q
Actual machine hours	2100	1200
Overhead rate	$6.20	$6.20
Overhead applied to jobs	$13,020.00	$7,440.00

Solution 11:

Computation of overhead applied from Fabrication department
Particulars	Job P	Job Q
Actual machine hours	1000	1300
Overhead rate	$13.00	$13.00
Overhead applied to jobs	$13,000.00	$16,900.00

Solution 12 & 13:

Compuatation of Overhead applied to Job
Particulars	Job P	Job Q
Manufacturing overhead - Molding	$13,020.00	$7,440.00
Manufacturing overhead - Fabrication	$13,000.00	$16,900.00
Total overhead applied	$26,020.00	$24,340.00

Compuatation of manufacturing cost and cost per unit assigned to Job
Particulars	Job P	Job Q
Direct Material	$17,000.00	$10,000.00
Direct Labor	$24,200.00	$9,100.00
Manufacturing overhead	$26,020.00	$24,340.00
Total Manufacturing cost	$67,220.00	$43,440.00
Nos of units	20	30
Cost per unit	$3,361	$1,448

Solution 14:

Compuatation of Total price and per unit price of job
Particulars	Job P	Job Q
Manufacturing Cost	$67,220.00	$43,440.00
Markup (80%)	$53,776.00	$34,752.00
Total price of job	$120,996.00	$78,192.00
Nos of units	20	30
Selling price per unit	$6,050	$2,606

Solution 15:

Cost of goods sold for march = $67,220 + $43,440 = $110,660