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    Chapter 2 Case

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    McCoy Brough
    Sweeten Company had two jobs, P and Q, in March with various direct and overhead costs. Using a plantwide overhead rate of $7.95 per machine hour, total manufacturing costs were $52,285 for Job P and $29,015 for Job Q. With departmental overhead rates of $5.40 per hour for Molding and $12.20 for Fabrication, total costs were slightly lower at $48,700 for Job P and $28,327 for Job Q. The cost of goods sold for March was $81,300. Landen Corporation estimated annual overhead costs and rates. For Job 550, total manufacturing costs using a direct labor hour rate of $7.60 was $

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    Chapter 2 Case

    Uploaded by

    McCoy Brough
    37 views3 pages
    Sweeten Company had two jobs, P and Q, in March with various direct and overhead costs. Using a plantwide overhead rate of $7.95 per machine hour, total manufacturing costs were $52,285 for Job P and $29,015 for Job Q. With departmental overhead rates of $5.40 per hour for Molding and $12.20 for Fabrication, total costs were slightly lower at $48,700 for Job P and $28,327 for Job Q. The cost of goods sold for March was $81,300. Landen Corporation estimated annual overhead costs and rates. For Job 550, total manufacturing costs using a direct labor hour rate of $7.60 was $

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    Sweeten Company had two jobs, P and Q, in March with various direct and overhead costs. Using a plantwide overhead rate of $7.95 per machine hour, total manufacturing costs were $52,285 for Job P and $29,015 for Job Q. With departmental overhead rates of $5.40 per hour for Molding and $12.20 for Fabrication, total costs were slightly lower at $48,700 for Job P and $28,327 for Job Q. The cost of goods sold for March was $81,300. Landen Corporation estimated annual overhead costs and rates. For Job 550, total manufacturing costs using a direct labor hour rate of $7.60 was $

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    37 views3 pages

    Chapter 2 Case

    Uploaded by

    McCoy Brough
    Sweeten Company had two jobs, P and Q, in March with various direct and overhead costs. Using a plantwide overhead rate of $7.95 per machine hour, total manufacturing costs were $52,285 for Job P and $29,015 for Job Q. With departmental overhead rates of $5.40 per hour for Molding and $12.20 for Fabrication, total costs were slightly lower at $48,700 for Job P and $28,327 for Job Q. The cost of goods sold for March was $81,300. Landen Corporation estimated annual overhead costs and rates. For Job 550, total manufacturing costs using a direct labor hour rate of $7.60 was $

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    of 3

    I.

    The Foundational 15 [LO2-1, LO2-2, LO2-3, LO2-4]


     
    Sweeten Company had no jobs in progress at the beginning of March and no beginning inventories.
    The company has two manufacturing departments--Molding and Fabrication. It started, completed,
    and sold only two jobs during March—Job P and Job Q. 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): 
      Molding Fabrication Total
    Estimated total machine-hours used   2,500    1,500    4,000 
    Estimated total fixed manufacturing overhead $10,000  $15,000  $25,000 
    Estimated variable manufacturing overhead per machine-hour $ 1.40  $ 2.20       

      Job P Job Q

    Direct materials $13,000   $8,000  

    Direct labor cost $21,000   $7,500  

    Actual machine-hours used:            

    Molding   1,700     800  

    Fabrication   600     900  

    Total   2,300    1,700  

     Sweeten Company had no underapplied or overapplied manufacturing overhead costs during the
    month.
     
    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
    departmental predetermined overhead rates with machine-hours as the allocation base in both
    departments. (Do not round intermediate calculations for any of the questions.)

    1. What was the company’s plant-wide predetermined overhead rate? (Round your answer to 2
    decimal places.) $7.95

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

    P:$18,285 Q:$13,515

    3. What was the total manufacturing cost assigned to Job P? 

    $52,285

    4. If Job P included 20 units, what was its unit product cost? (Round your final answer to nearest
    whole dollar.) $2,614

    5. What was the total manufacturing cost assigned to Job Q? $29,015

    6. If Job Q included 30 units, what was its unit product cost? (Round your final answer to nearest
    whole dollar.) $967
    7. Assume that Sweeten Company used cost-plus pricing (and a markup percentage of 80% of total
    manufacturing cost) to establish selling prices for all of its jobs. What selling price would the
    company have established for Jobs P and Q? What are the selling prices for both jobs when stated
    on a per unit basis assuming 20 units were produced for Job P and 30 units were produced for Job
    Q? (Round your final answers to nearest whole dollar.) P:$4,705 Q:$1,741

    8. What was Sweeten Company’s cost of goods sold for March?  $81,300

    9. What were the company’s predetermined overhead rates in the Molding Department and the
    Fabrication Department? (Round your answers to 2 decimal places.) Molding:$5.40 Fab.:$12.20

    10. How much manufacturing overhead was applied from the Molding Department to Job P and how
    much was applied to Job Q?  P:$9,180 Q:$4,320

    11. How much manufacturing overhead was applied from the Fabrication Department to Job P and
    how much was applied to Job Q?  P:$7,320 Q:$10,980

    12. If Job P included 20 units, what was its unit product cost? $2,525

    13. If Job Q included 30 units, what was its unit product cost? (Round your final answer to
    nearest whole dollar.) $1,027

    14. Assume that Sweeten Company used cost-plus pricing (and a markup percentage of 80% of
    total manufacturing cost) to establish selling prices for all of its jobs. What selling price would the
    company have established for Jobs P and Q? What are the selling prices for both jobs when stated
    on a per unit basis assuming 20 units were produced for Job P and 30 units were produced for Job
    Q? 
     P:$4,545 Q:$1,849
    15. What was Sweeten Company’s cost of goods sold for March?

    $81,300

    II. Landen Corporation uses a job-order costing system. At the beginning of the year, the
    company made the following estimates: 
         
    Direct labor-hours required to support estimated production  140,000
    Machine-hours required to support estimated production   70,000
    Fixed manufacturing overhead cost $784,000
    Variable manufacturing overhead cost per direct labor-hour $ 2.00
    Variable manufacturing overhead cost per machine-hour $ 4.00

     During the year, Job 550 was started and completed. The following information is available with
    respect to this job: 
         
    Direct materials $175
    Direct labor cost $225
    Direct labor-hours   15
    Machine-hours   5

    Required:
    1. Assume that Landen has historically used a plantwide predetermined overhead rate with direct
    labor-hours as the allocation base. Under this approach:
    a. Compute the plantwide predetermined overhead rate. $7.60
    b. Compute the total manufacturing cost of Job 550. $514
    c. If Landen uses a markup percentage of 200% of its total manufacturing cost, what selling price
    would it establish for Job 550? $1,028
     
    2. Assume that Landen’s controller believes that machine-hours is a better allocation base than
    direct labor-hours. Under this approach:
    a. Compute the plantwide predetermined overhead rate. $15.20
    b. Compute the total manufacturing cost of Job 550. $476
    c. If Landen uses a markup percentage of 200% of its total manufacturing cost, what selling price
    would it establish for Job 550? $952
    (Round your intermediate calculations to 2 decimal places. Round your Predetermined
    Overhead Rate answers to 2 decimal places and all other answers to the nearest whole
    dollar.)

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