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	$	14,500		$	17,700		$	32,200
Estimated variable manufacturing overhead per machine-hour	$	3.20		$	4.00

	Job P			Job Q
Direct materials	$	31,000		$	17,000
Direct labor cost	$	35,400		$	14,700
Actual machine-hours used:
Molding		3,500			2,600
Fabrication		2,400			2,700
Total		5,900			5,300

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.

1. What was the company’s plantwide predetermined overhead rate? (Round your answer to 2 decimal places.)

Find predetermine overheard rate

Answer 1

Calculation of company’s plantwide predetermined overhead rate

Plantwide predetermined overhead rate = [Estimated total fixed manufacturing overhead + Estimated total variable manufacturing overhead] / Estimated total machine-hours used

Estimated total fixed manufacturing overhead = $32200

Estimated total variable manufacturing overhead = [2500 machine hours x $3.20] + [1500 machine hours x $4] = $14,000

Estimated total machine-hours used = 4000 hours

Plantwide predetermined overhead rate = [$32200 + $14000]/4000 machine hours = $11.55 per machine hour