Question

Required information [The following information applies to the questions displayed below.] 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 31,000 41,000 72,000 Manufacturing overhead costs $ 885,000 $ 495,000 $ 1,380,000 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 $ 371,000 $ 330,000 $ 701,000 Direct labor cost $ 210,000 $ 130,000 $ 340,000 Machine-hours 22,000 9,000 31,000 Job C-100: Molding Fabrication Total Direct materials cost $ 210,000 $ 220,000 $ 430,000 Direct labor cost $ 160,000 $ 260,000 $ 420,000 Machine-hours 9,000 32,000 41,000 Smithson had no overapplied or underapplied manufacturing overhead during the year. 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.) 1-b. Compute the total manufacturing costs assigned to Job D-75 and Job C-100. (Round your intermediate calculations to 2 decimal places.) 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

1-a. Pre-determined plantwide overhead rate = Total overheads/Total machine-hours = $1380000/72000 = $19.17 per machine hour

1-b.

	Job D-75	Job C-100
Direct materials	701000	430000
Direct labor	340000	420000
Overheads	594270	785970
	(31000 x $19.17)	(41000 x $19.17)
Total manufacturing costs $	1635270	1635970

1-c.

	Job D-75	Job C-100
Total manufacturing costs $	1635270	1635970
Bid prices $	1962324	1963164
	($1635270 x 120%)	($1635970 x 120%)

1-d. Cost of goods sold for the year: $1635270 + $1635970 = $3271240