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    22,000    32,000    54,000

Fixed manufacturing overhead costs $ 780,000 $ 230,000 $ 1,010,000

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 $ 377,000 $ 324,000 $ 701,000

Direct labor cost $ 230,000 $ 160,000 $ 390,000

Machine-hours 16,000 6,000 22,000

Job C-100: Molding Fabrication Total

Direct materials cost $ 290,000 $ 250,000 $ 540,000

Direct labor cost $ 160,000 $ 240,000 $ 400,000

Machine-hours 6,000 26,000 32,000

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

2-a. Compute the predetermined departmental overhead rates. (Round your answer to 2 decimal places.)

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

2-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.)

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

Answer 1

2a
	Predetermined overhead rate
Molding Department	40.45	=5+(780000/22000)
Fabrication Department	12.19	=5+(230000/32000)
b
	Job D-75	Job C-100
Direct materials cost	701000	540000
Direct labor cost	390000	400000
Overhead:
Molding Department	647200	242700
Fabrication Department	73140	316940
Total manufacturing cost	1811340	1499640
c
	Job D-75	Job C-100
Total manufacturing cost	1811340	1499640
Add: Markup @20%	362268	299928
Bid prices	2173608	1799568
d
Total manufacturing cost Job D-75	1811340
Total manufacturing cost Job C-100	1499640
Cost of goods sold	3310980
Workings:
	Job D-75	Job C-100
Overhead:
Molding Department	=16000*40.45	=6000*40.45
Fabrication Department	=6000*12.19	=26000*12.19