Question

Smithson Company uses a job-order costing system and has two manufacturing departments—Molding and Fabrication.

The company provided the following estimates at the beginning of the year:

Machine Hours Molding    Fabrication    Total

   22,000 32,000 54,000

Fixed manufacturing overhead costs $ 780,000 $ 230,000    $ 1,010,000

Variable manufacturing overhead per machine-hour $ 5.00    $ 5.00

During the year, the company had no beginning or ending inventories and it started, completed, and sold only two jobs—Job D-75 and Job C-100. It provided the following information related to those two jobs:

Job D-75:

Molding    Fabrication Total Direct

materials cost    $ 377,000 $ 324,000 $ 701,000

Direct labor cost $ 230,000 $ 160,000 $ 390,000

Machine-hours    16,000 6,000    22,000

Job C-100:

Molding Fabrication    Total Direct

materials cost    $ 290,000    $ 250,000 $ 540,000

Direct labor cost $ 160,000    $ 240,000    $ 400,000

Machine-hours    6,000 26,000    32,000

Smithson had no overapplied or underapplied manufacturing overhead during the year. Assume Smithson uses a plantwide overhead rate based on machine-hours.

Required:

1-a. Compute the predetermined plantwide overhead rate. (Round your answer to 2 decimal places.)

1-b. Compute the total manufacturing costs assigned to Job D-75 and Job C-100. (Round your intermediate calculations to 2 decimal places.)

1-c. If Smithson establishes bid prices that are 120% of total manufacturing costs, what bid price would it have established for Job D-75 and Job C-100? (Round your intermediate calculations to 2 decimal places.)

1-d. What is Smithson’s cost of goods sold for the year? (Round your intermediate calculations to 2 decimal places.)

Answer 1

• Requirement 1

Part A

		Molding Department:	Fabrication Department:
A	Variable Overhead rate	$                              5.00	$                             5.00
B	Total machine hours	22,000	32,000	54,000
C = A x B	Total Variable Overhead	$                       110,000	$                      160,000	$                270,000
D	Total Fixed Overheads	$                       780,000	$                      230,000	$            1,010,000
E = C+D	Total manufacturing Overhead			$            1,280,000
F	Total machine hours			54,000
G = E/F	Plant Wide Overhead rate			$                    23.70	Answer

Part B

	Job D 70	Job C 200
Molding Department:
Direct material cost	$                       377,000	$                      290,000
Direct Labor cost	$                       230,000	$                      160,000
Manufacturing Overhead	$                       379,200	$                      142,200
Fabrication Department:
Direct material cost	$                       324,000	$                      250,000
Direct Labor cost	$                       160,000	$                      240,000
Manufacturing Overhead	$                       142,200	$                      616,200
Total manufacturing cost assigned	$                   1,612,400	$                  1,698,400	ANSWERS

Part C

		Job D 70	Job C 200
A	Total manufacturing cost assigned	$                   1,612,400	$                  1,698,400
B = A x 120%	Bid Price	$                   1,934,880	$                  2,038,080

Part D

Total manufacturing cost assigned
Job D 70	$                   1,612,400
Job C 200	$                   1,698,400
Cost of Goods Sold	$                   3,310,800