Question

Exercise 4-15 Plantwide and Departmental Overhead Rates: Job Costs [LO4-1, L04-2, L04-3] The following information applies to the questions displayed below.) 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 32,000 42,000 74,000 Fixed manufacturing overhead costs $760,000 $200,000 $960,000 Variable manufacturing overhead per machine S 5.00 $ 5.00 Pour 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 $ 210,000 $ 130,000 $340,000 Machine-hours 22,000 10,000 32,000 Job C-100: Direct materials cost Direct labor cost Machine-hours Molding Fabrication Total $ 290,000 $ 210,000 $500,000 $ 170,000 $ 300,000 $470,000 10,000 32,000 42,000 Smithson had no overapplied or underapplied manufacturing overhead during the year. References Section Break Exercise 4-15 Plantwide and Departmental Overhead Rates: Job Costs [LO4- 1. LO4-2, L04-3)

Answer 1

1-a.
	Molding	Fabrication	Total
Estimated machine hours	32000	42000	74000
(*) Estimated variable manufacturing overhead per machine hour	5.00	5.00
Estimated total variable manufacturing overhead	160000	210000	370000
Estimated total fixed manufacturing overhead	760000	200000	960000
Estimated total manufacturing overhead	920000	410000	1330000

Plantwide predetermined overhead rate = Estimated total manufacturing overhead / Estimated total machine hours used = 1330000 / 74000

17.97

per MH

1-b.
	Job D-75	Job C-100
Direct materials cost	701000	500000
Direct labor cost	210000	130000
Manufacturing overhead applied	575040	754740
Total manufacturing cost	1486040	1384740

1-c.
	Job D-75	Job C-100
Total manufacturing cost	1486040	1384740
Bid price [ @ 120% of total manufacturing cost ]	1783248	1661688

1-d.
Cost of goods sold = Total manufacturing cost of jobs sold = 1486040 + 1384740	2870780