Question

Molding Estimated total machine-hours used Estimated total fixed manufacturing overhead Estimated variable manufacturing overhead per machine-hour Fabrication Total 1,500 4,000 $ 16,050.00 $ 27,800.00 $ 2.90 2,500 11,750.00 2.10 $ $ Job P $ $ 20,000.00 26, 600.00 Job $ $ 11,500.00 10,300.00 Direct materials Direct labor cont Actual machine-hours used: Molding Fabrication Total 2,400 1,300 3,700 1,500 1,600 3,100

1. If Job P included 20 units, what was its unit product cost?

2. What was the total manufacturing cost assigned to Job Q?

3. If Job Q included 30 units, what was its unit product cost?

4. 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?

5. What was Sweeten Company’s cost of goods sold for March?

6. What was the company’s plantwide predetermined overhead rate?

Answer 1

Plantwide predetermined overhead rate = Estimated total manufacturing overhead / Estimated total machine hours

Plantwide predetermined overhead rate = $27,800+(2,500*$2.10+1,500*$2.90) / 4,000

Plantwide predetermined overhead rate = $27,800 + 5,250 + 4,350 / 4,000

Plantwide predetermined overhead rate = $37,400 / 4,000 = $9.35 per machine hour

1.

	Job P
Direct material	$20,000
Direct labor	26,600
Manufacturing overhead (3,700*$9.35)	34,595
Total manufacturing costs	$81,195
Total units	20
Unit product cost	$4,059.75

2.

	Job Q
Direct material	$11,500
Direct labor	10,300
Manufacturing overhead (3,100*$9.35)	28,985
Total manufacturing costs	$50,785

3.

Unit product costs = $50,785 / 30 = $1,692.83

4.

Selling price per unit:

Job P = $4,059.75 + 80% = $7,307.55

Job Q = $1,692.83 + 80% = $3,047.094

5.

Cost of goods sold = $81,195 + $50,785 = $131,980

6.  

Plantwide predetermined overhead rate = Estimated total manufacturing overhead / Estimated total machine hours

Plantwide predetermined overhead rate = $27,800+(2,500*$2.10+1,500*$2.90) / 4,000

Plantwide predetermined overhead rate = $27,800 + 5,250 + 4,350 / 4,000

Plantwide predetermined overhead rate = $37,400 / 4,000 = $9.35 per machine hour