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	$	10,000		$	15,000		$	25,000
Estimated variable manufacturing overhead per machine-hour	$	1.40		$	2.20

	Job P			Job Q
Direct materials	$	13,000		$	8,000
Direct labor cost	$	21,000		$	7,500
Actual machine-hours used:
Molding		1,700			800
Fabrication		600			900
Total		2,300			1,700

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.

Foundational 2-1

1. What was the company’s plantwide predetermined overhead rate? (Round your answer to 2 decimal places.)

Answer 1

According to the question the following information is avaliable:

	Molding	FAbrication	Total
machine hrs	2500	1500	4000
variable overhead	1.4	2.2
fixed overhead	10,000	15,000	25,000

Plantwide predetermined overhead rate = (total overhead cost)/ (total activity base units)

total overhead cost = (machine hr * variable cost + fixed cost)

total overhead cost = 2500 * 1.4 + 1500 * 2.2 + 10,000 + 15,000

= 31,800 $

Total activity base unit = 4000 hrs

plantwide pre determined overhead rate = 31,800 / 4000

= 7.95 $/hr