Question

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		30,000		40,000		70,000
Fixed manufacturing overhead costs	$	700,000	$	250,000	$	950,000
Variable manufacturing overhead per machine-hour	$	5.00	$	5.00

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	$	374,000	$	328,000	$	702,000
Direct labor cost	$	210,000	$	130,000	$	340,000
Machine-hours		25,000		5,000		30,000

  

Job C-100:	Molding		Fabrication		Total
Direct materials cost	$	230,000	$	210,000	$	440,000
Direct labor cost	$	110,000	$	250,000	$	360,000
Machine-hours		5,000		35,000		40,000

Smithson had no overapplied or underapplied manufacturing overhead during the year.
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Assume Smithson uses a plantwide overhead rate based on machine-hours.  

Required:

1-a. Compute the predetermined plantwide overhead rate. (Round your answer to 2 decimal places.)

Predetermined Overhead Rate: ___________________

1-b. Compute the total manufacturing costs assigned to Job D-75 and Job C-100. (Round your intermediate calculations to 2 decimal places.)

  

Job D-75: total manufacturing costs = ___________

Job C-100: total manufacturing costs = ____________

1-c. If Smithson establishes bid prices that are 120% of total manufacturing costs, what bid price would it have established for Job D-75 and Job C-100? (Round your intermediate calculations to 2 decimal places.)

1-d. What is Smithson’s cost of goods sold for the year? (Round your intermediate calculations to 2 decimal places.)

Answer 1

Req 1
Pre-determined OH rate:
Estimated Fixed OH				950000
Divide: Estimated Machine hours				70000
Fixed OH rate per MH				31.66667
Add: variable OH per MH				5
OH rate per MH				36.67
Req 2
			Job D-75	Job c-100
Direct Material			702000	440000
Direct Labour			340000	360000
OH applied
Job D-75 (30000 MH @ 36.67)			1100000
Job C-100 (40000MH @36.67)				1466800
Total Manufacturing cost			2142000	2266800
Req 3:
			Job D-75	Job c-100
Total Manufacturing cost			2142000	2266800
Add: Markup @20%			428400	453360
Bid Price			2570400	2720160
Req 4:
Costt of Goods sold:
Job D-75		2142000
Job C-100		2266800
Total cost of Goods sold		4408800