Smithson Company uses a job-order costing system and has two manufacturing depar

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:

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:

  

Smithson had no overapplied or underapplied manufacturing overhead during the year.
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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.)

Predetermined Overhead Rate: ___________________

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

  

Job D-75: total manufacturing costs = ___________

Job C-100: total manufacturing costs = ____________

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.)

Molding Fabrication Total Machine-hours 30,000 40,000 70,000 Fixed manufacturing overhead costs $ 700,000 $ 250,000 $ 950,000 Variable manufacturing overhead per machine-hour $ 5.00 $ 5.00

Explanation / Answer

Req 1 Pre-determined OH rate: Estimated Fixed OH 950000 Divide: Estimated Machine hours 70000 Fixed OH rate per MH 31.66667 Add: variable OH per MH 5 OH rate per MH 36.67 Req 2 Job D-75 Job c-100 Direct Material 702000 440000 Direct Labour 340000 360000 OH applied Job D-75 (30000 MH @ 36.67) 1100000 Job C-100 (40000MH @36.67) 1466800 Total Manufacturing cost 2142000 2266800 Req 3: Job D-75 Job c-100 Total Manufacturing cost 2142000 2266800 Add: Markup @20% 428400 453360 Bid Price 2570400 2720160 Req 4: Costt of Goods sold: Job D-75 2142000 Job C-100 2266800 Total cost of Goods sold 4408800

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