[The following information applies to the questions displayed below.] Sweeten Co

Question

[The following information applies to the questions displayed below.] Sweeten Company had no jobs In progress at the beginning of March and no beginning Inventories. It started only two Jobs during March Job P and Job Q. Job P was completed and sold by the end of the March and Job Q was Incomplete at the end of the March. The company uses a plantwide predetermined overhead rate based on direct labor-hours. The following additional Information is avallable for the company as a whole and for Jobs P and Q (all data and questions relate to the month of March): Estimated total fixed manufacturing overhead Estimated varlable manufacturing overhead per direct labor-hour Estlmated total direct labor-hours to be worked Total actual manufacturing overhead costs Incurred $14,500 $ 1.90 2,900 $18,000 Direct materials Direct labor cost Actual direct labor-hours worked Job P Job Q $ 18,500 $ 8,900 $ 40,000 $10,000 2,000 000 500 X)

Explanation / Answer

Calculation of Plant-wide pre-determined OH Rate Estimated total fixed manufacturing OH 14500 Estimated total Variable Mfg. OH 1.9*2900 5510 Estimated total OH 20010 Estimated Direct labour hrs. 2000 Plant-wide pre-determined OH Rate per direct labor hr.= 20010/2000= 10.005 2 Job P Job Q Mfg. OH applied 2000 hrs.*10.005 20010 500 hrs.*10.005 5002.5 3 Direct labor hourly wage rate Job P Job Q Direct Labour cost 40000 10000 Direct labor hrs. worked 2000 500 Direct labor hrly. Wage rate (Labor cost/Labor hrs.) 20 20

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