Question

Sweeten Company had no jobs in progress at the beginning of March and no beginning inventories. It started only two jobs during March—Job P and Job Q. Job P was completed and sold by the end of the March and Job Q was incomplete at the end of the March. The company uses a plantwide predetermined overhead rate based on direct labor-hours. 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):

Answer the following questions:

1. What is the company’s predetermined overhead rate? (Round 2 decimal places)

2. How much manufacturing overhead was applied to Job P and Job Q

3. What is the direct labor hourly wage rate?

4. If Job P includes 20 units, what is its unit product cost?

5. What is the total amount of manufacturing cost assigned to Job Q as of the end of March (including applied overhead)?

Estimated total fixed manufacturing overhead

$

10,500

Estimated variable manufacturing overhead per direct labor-hour

$

1.10

Estimated total direct labor-hours to be worked

2,100

Total actual manufacturing overhead costs incurred

$

12,600

	Job P	Job Q
Direct Materials	13,100	8,100
Direct Labor Cost	14,400	6,600
Actual direct labor hours worked	1,200	550

Answer 1

Solution:

1.

Predetermined Overhead rate
Fixed Overhead	10500
Variable Overhead	2310
Estimated Total Manufacturing Overhead	12810
Estimated Direct Labor Hours	2100
Predetermined Overhead rate	=12810/2100
	$6.1

2.

	Hours Worked	Rate per hour	Overhead Applied
Job P	1200	6.1	7320
Job Q	550	6.1	3355

3.

	Job P	Job Q
Labor Cost	14400	6600
Actual Hours Worked	1200	550
Direct Labor hourly wage rate	12	12

4.

Job P
Direct Materials	13100
Direct Labor Cost	14400
Manufacturing Overeheads	7320
Total Cost	34820
Units Produced	20
Cost per unit	=34820/20
	$1741

5.

Job Q
Direct Materials	8100
Direct Labor Cost	6600
Manufacturing Overehead	3355
Total Cost	18055