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.

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

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

Answer 1

Solution 14:

Predetermined overhead rate = Estimated total overhead / Estimated machine hours = (2500*$1.90 + 1500*$2.70 + $27,000) / 4000 = $8.95 per machine hour

Computation of overhead applied - Plantwide overhead rate
Particulars	Job P	Job Q
Actual machine hours	3300	2700
Overhead rate	$8.95	$8.95
Overhead applied to jobs	$29,535.00	$24,165.00

Compuatation of manufacturing cost assigned to Job P and Q
Particulars	Job P	Job Q
Direct Material	$18,000	$10,500
Direct Labor	$25,000	$9,500
Manufacturing overhead	$29,535	$24,165
Total Manufacturing cost	$72,535	$44,165

Compuatation of Total price and per unit price of job
Particulars	Job P	Job Q
Manufacturing Cost	$72,535.00	$44,165.00
Markup (80%)	$58,028.00	$35,332.00
Total price of job	$130,563.00	$79,497.00
Nos of units	20	30
Selling price per unit	$6,528	$2,650

Solution 15:

Cost of goods sold for march = $72,535 + $44,155 = $116,700