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	$	14,750		$	17,850		$	32,600
Estimated variable manufacturing overhead per machine-hour	$	3.30		$	4.10

	Job P			Job Q
Direct materials	$	32,000		$	17,500
Direct labor cost	$	36,200		$	15,100
Actual machine-hours used:
Molding		3,600			2,700
Fabrication		2,500			2,800
Total		6,100			5,500

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

Required:

For questions 1-8, assume that Sweeten Company uses a plantwide predetermined overhead rate with machine-hours as the allocation base. For questions 9-15, assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both departments.

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 assuming 20 units were produced for Job P and 30 units were produced for Job Q? (Do not round intermediate calculations. Round your final answer to nearest whole dollar.)

Answer 1

Solution 14:

Computation of departmental overhead rates
Particulars	Molding	Fabrication
Fixed manufacturing overhead	$14,750	$17,850
Variable manufacturing overhead	$8,250	$6,150
Total manufacturing overhead	$23,000	$24,000
Nos of machine hours	2500	1500
Overhead rate per machine hour	$9.20	$16.00

Computation of overhead applied from Molding department
Particulars	Job P	Job Q
Actual machine hours	3600	2700
Overhead rate	$9.20	$9.20
Overhead applied to jobs	$33,120.00	$24,840.00

Computation of overhead applied from Fabrication department
Particulars	Job P	Job Q
Actual machine hours	2500	2800
Overhead rate	$16.00	$16.00
Overhead applied to jobs	$40,000.00	$44,800.00

Computation of Overhead applied to Job
Particulars	Job P	Job Q
Manufacturing overhead - Molding	$33,120.00	$24,840.00
Manufacturing overhead - Fabrication	$40,000.00	$44,800.00
Total overhead applied	$73,120.00	$69,640.00

Compuatation of manufacturing cost assigned to Job - Sweeten Company
Particulars	Job P	Job Q
Direct Material	$32,000.00	$17,500.00
Direct Labor	$36,200.00	$15,100.00
Manufacturing overhead - Molding	$33,120.00	$24,840.00
Manufacturing overhead - Fabrication	$40,000.00	$44,800.00
Total Manufacturing cost	$141,320.00	$102,240.00
Compuatation of Total price and per unit price of job
Particulars	Job P	Job Q
Manufacturing Cost	$141,320	$102,240
Markup (80%)	$113,056	$81,792
Total price of job	$254,376	$184,032
Nos of units	20	30
Selling price per unit	$12,719	$6,134