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	$	11,250		$	15,750		$	27,000
Estimated variable manufacturing overhead per machine-hour	$	1.90		$	2.70

	Job P			Job Q
Direct materials	$	18,000		$	10,500
Direct labor cost	$	25,000		$	9,500
Actual machine-hours used:
Molding		2,200			1,300
Fabrication		1,100			1,400
Total		3,300			2,700

Sweeten Company had no underapplied or overapplied manufacturing overhead costs during the month.

Required:

For questions 1-9, assume that Sweeten Company uses departmental predetermined overhead rates with machine-hours as the allocation base in both departments and Job P included 20 units and Job Q included 30 units. For questions 10-15, assume that the company uses a plantwide predetermined overhead rate with machine-hours as the allocation base.

5. If Job P included 20 units, what was its unit product cost?(Do not round intermediate calculations. Round your final answer to nearest whole dollar.)

6. What was the total manufacturing cost assigned to Job Q?(Do not round intermediate calculations.)

7. 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.)

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

Answer 1

we will find Departmental Pre determined OH rate

1 ] Molding

Pre determined Oh rate = Fixed OH / Machine houre

=$11,250/2,500

=$4.5 fixed OH per machine hour

Total OH rate per Machine hour = Fixed OH + Variable OH

=$4.5+$1.90

=$6.4 per machine hour

Fabrication

$15,750/1500

=$10.5 per MH

Total OH rate =Fixed OH rate per MH+ Variable OH rate per MH

$10.5+$2.70

=$13.2 per machine hour

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2] Manufacturing OH applied Molding department = Rate per hour*Machine hour used

	P	Q
Molding	$14,080[$6.4*2,200]	$8,320[$6.4*1,300]

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3] Fabrication department applied OH = Rate per hour of fabricating department*Machine hour used in fabricating department

• 	P	Q
  Fabrication	$14,520[$13.2*1,100]	$18,480[$13.2*1,400]

________________________________________________________________

4]Now we will allocate cost to Product P

	P
Direct material	$18,000
Direct labor	$25,000
Overhead applied
Modling departments	$14,080
Fabrication department	$14,520
Total manufacturing costs	$71,600

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5]

	P
Total manufacturing costs	$71,600
units	20
Cost per unit	$3,580[$71,600/20]

6]

	Q
Direct material	$10,500
Direct labor	$9,500
Overhead applied
Modling departments	$8,320
Fabrication department	$18,480
Total manufacturing costs	$46,800

7]

	Q
Total manufacturing costs	$46,800
units	30
Cost per unit	$1,560[$46,800/30]

8]

	p	q
COST	$71,600	$46,800
Add: markup	$57,280[71,600*80%]	$37,440[46,800*80%]
Selling price	$128,880	$84,240
units	20	30
Price per unit	$6,444[$128,880/20]	$2,808 [84,240/30]