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 year—Job 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 period’s estimated level of production. Sweeten also estimated $25,000 of fixed manufacturing overhead cost for the coming period and variable manufacturing overhead of $1.70 per machine-hour. Because Sweeten has two manufacturing departments—Molding and Fabrication—it 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 $ 10,000 $ 15,000 $ 25,000 Estimated variable manufacturing overhead per machine-hour $ 1.40 $ 2.20 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 $ 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 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. Foundational 2-1 (Static)
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
The Foundational 15 (Static) [LO2-1, LO2-2, LO2-3, LO2-4]
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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 year—Job P and Job Q. The company uses a plantwide predetermined
Because Sweeten has two manufacturing departments—Molding and Fabrication—it 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 | $ 10,000 | $ 15,000 | $ 25,000 |
| Estimated variable manufacturing overhead per machine-hour | $ 1.40 | $ 2.20 |
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 | $ 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 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.
Foundational 2-1 (Static)
1. What is the company’s plantwide predetermined overhead rate? (Round your answer to 2 decimal places.)
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