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:

  

	Molding		Fabrication		Total
Machine-hours		24,000		34,000	58,000
Fixed manufacturing overhead costs	$	770,000	$	230,000	$ 1,000,000
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	$	373,000	$	326,000	$	699,000
Direct labor cost	$	250,000	$	170,000	$	420,000
Machine-hours		17,000		7,000		24,000

  

Job C-100:	Molding		Fabrication		Total
Direct materials cost	$	290,000	$	270,000	$	560,000
Direct labor cost	$	160,000	$	300,000	$	460,000
Machine-hours		7,000		27,000		34,000

  
Smithson had no overapplied or underapplied manufacturing overhead during the year.

eBook & Resources

eBook: JOB-ORDER COSTING—AN EXAMPLE – LO 1eBook: JOB-ORDER COSTING—AN EXAMPLE – LO 2eBook: JOB-ORDER COSTING—AN EXAMPLE – LO 3

8.

value:
3.00 points

Required information

Required:

Assume Smithson uses a plantwide overhead rate based on machine-hours.

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

   

Predetermined overhead rate

$  per MH

  

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

   

	Total Manufacturing Cost
Job D-75	$
Job C-100	$

  

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.)

   

	Bid price
Job D-75	$
Job C-100	$

  

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

   

Cost of goods sold

$

References

eBook & Resources

WorksheetLearning Objective: 02-01 Compute a predetermined overhead rate.Learning Objective: 02-03 Compute the total cost and average cost per unit of a job.

Difficulty: HardLearning Objective: 02-02 Apply overhead cost to jobs using a predetermined overhead rate.

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9.

value:
3.00 points

Required information

Assume Smithson uses departmental overhead rates based on machine-hours.

  

2-a.	Compute the predetermined departmental overhead rates. (Round your answers to 2 decimal places.)

  

	Predetermined Overhead Rates
Molding Department	$
Fabrication Department	$

  

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

   

	Total Manufacturing Cost
Job D-75	$
Job C-100	$

  

2-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, "Total manufacturing cost" and final answers to the nearest dollar amount.)

   

	Bid price
Job D-75	$
Job C-100	$

  

2-d.	What is Smithson’s cost of goods sold for the year? (Round your intermediate calculations to 2 decimal places, "Total manufacturing cost" and final answers to the nearest dollar amount.)

   

Cost of goods sold

$

Answer 1

1a	Calculation of predetermined plantwide overhead rate
	Total fixed manufacturing cost	1,000,000.00
	Total Variable cost($58000*5)	290,000.00
	Total Manufacturing Cost	1,290,000.00
	Total Machine hours	58,000.00
	predetermined plantwide overhead rate	22.24

1b		Job D-75	Job C-100
	Direct materials cost	$      699,000.00	$      560,000.00
	Direct labor cost	$      420,000.00	$      460,000.00
	Manufacturing overhead	$      533,760.00	$      756,160.00
	Total Manufacturing cost	$ 1,652,760.00	$ 1,776,160.00

1c	Total Manufacturing cost	$ 1,652,760.00	$ 1,776,160.00
	Bid Price(120%)	$ 1,983,312.00	$ 2,131,392.00

1d)

1d	Calculation of cost of goods Sold
	Job	Total Manufacturing cost
	Job D-75	$                       1,652,760.00
	Job C-100	$                       1,776,160.00
	Cost of Goods Sold	$                       3,428,920.00

2a)

2a	Calculation of predetermined departmental overhead rates
		Molding	Fabrication
	Total fixed manufacturing cost	$                          770,000.00	$                          230,000.00
	Total Variable cost	$                          120,000.00	$                          170,000.00
	Total Manufacturing Cost	$                          890,000.00	$                          400,000.00
	Total Machine hours	24,000.00	$                             34,000.00
	predetermined departmental overhead rates	$                                     37.08	$                                     11.76

2b)

2b		Job D-75	Job C-100
	Direct materials cost	$                          699,000.00	$      560,000.00
	Direct labor cost	$                          420,000.00	$      460,000.00
	Molding Department Applied Overhead	$                          630,360.00	$      259,560.00
	Fabrication Department Applied Overhead	$                             82,320.00	$      317,520.00
	Total Manufacturing cost	$                       1,831,680.00	$ 1,597,080.00

2c	Total Manufacturing cost	$                       1,831,680.00	$ 1,597,080.00
	Bid Price(120%)	$                       2,198,016.00	$ 1,916,496.00

2d	Calculation of cost of goods Sold
	Job	Total Manufacturing cost
	Job D-75	$                       1,831,680.00
	Job C-100	$                       1,597,080.00
	Cost of Goods Sold	$                       3,428,760.00