Sweeten Company had no jobs in progress at the beginning of the year and no beginning inventories.
Question:
Sweeten Company had no jobs in progress at the beginning of the year and no beginning inventories. It started, completed, and sold only two jobs during the yearJob P and Job Q. The company uses a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, it estimated that 4,000 machine-hours would be required for the periods estimated level of production. Sweeten also estimated $27,400 of fixed manufacturing overhead cost for the coming period and variable manufacturing overhead of $2.30 per machine-hour.
Because Sweeten has two manufacturing departmentsMolding and Fabricationit is considering replacing its plantwide overhead rate with departmental rates that would also be based on machine-hours. The company gathered the following additional information to enable calculating departmental overhead rates:
Molding | Fabrication | Total | |
---|---|---|---|
Estimated total machine-hours used | 2,500 | 1,500 | 4,000 |
Estimated total fixed manufacturing overhead | $ 11,500 | $ 15,900 | $ 27,400 |
Estimated variable manufacturing overhead per machine-hour | $ 2.00 | $ 2.80 |
The direct materials cost, direct labor cost, and machine-hours used for Jobs P and Q are as follows:
Job P | Job Q | |
---|---|---|
Direct materials | $ 19,000 | $ 11,000 |
Direct labor cost | $ 25,800 | $ 9,900 |
Actual machine-hours used: | ||
Molding | 2,300 | 1,400 |
Fabrication | 1,200 | 1,500 |
Total | 3,500 | 2,900 |
Sweeten Company had no overapplied or underapplied manufacturing overhead costs during the year.
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 predetermined departmental overhead rates with machine-hours as the allocation base in both departments.
6. If Job Q includes 30 units, what is its unit product cost?
Introduction to Managerial Accounting
ISBN: 978-1259917066
8th edition
Authors: Peter C. Brewer, Ray H Garrison, Eric Noreen