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Solutions Manual, Chapter 2 11
Chapter 2: Applying Excel (continued)
4. When the total number of direct labor-hours in the Assembly Depart-
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12 Managerial Accounting, 16th edition
Chapter 2: Applying Excel (continued)
The selling price of Job 408 has increased from $2,905.00 to $2,944.38.
This occurs because the decrease in the total number of direct labor-
hours in the Assembly Department increases the predetermined over-
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Solutions Manual, Chapter 2 13
The Foundational 15
1. The first step is to calculate the estimated total overhead costs in Mold-
ing and Fabrication:
Molding: Using the equation
Y
=
a
+
bX
, the estimated total manufac-
turing overhead cost is computed as follows:
Y = $10,000 + ($1.40 per MH)(2,500 MHs)
Fabrication: Using the equation
Y
=
a
+
bX
, the estimated total manu-
facturing overhead cost is computed as follows:
Y = $15,000 + ($2.20 per MH)(1,500 MHs)
The second step is to combine the estimated manufacturing overhead
costs in Molding and Fabrication ($13,500 + $18,300 = $31,800) to en-
able calculating the predetermined overhead rate as follows:
2. The manufacturing overhead applied to Jobs P and Q is computed as
follows:
Job
P
Job
Q
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14 Managerial Accounting, 16th edition
The Foundational 15
3. The total manufacturing cost assigned to Job P is computed as follows:
Job
P
Direct materials …………………………………… $13,000
T
g
4. Job P’s unit product cost is computed as follows:
Job
P
T
g
5. The total manufacturing cost assigned to Job Q is computed as follows:
Job
P
Direct materials …………………………………… $ 8,000
T
g
6. Job Q’s unit product cost is computed as follows:
Job
P
T
7. The selling prices are calculated as follows:
Job
P
Job
Q
T
otal manufacturin
g
cost ………………………. $52,285 $29,015
T
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Solutions Manual, Chapter 2 15
The Foundational 15
8. The cost of goods sold is the sum of the manufacturing costs assigned
to Jobs P and Q:
9. Molding: Using the equation
Y
=
a
+
bX
, the estimated total manufac-
turing overhead cost is computed as follows:
Y = $10,000 + ($1.40 per MH)(2,500 MHs)
g
The predetermined overhead rate in Molding is computed as follows:
Fabrication: Using the equation
Y
=
a
+
bX
, the estimated total manu-
facturing overhead cost is computed as follows:
Y = $15,000 + ($2.20 per MH)(1,500 MHs)
Estimated fixed manufacturin
g
overhead ……………… $15,000
The predetermined overhead rate in Fabrication is computed as follows:
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16 Managerial Accounting, 16th edition
The Foundational 15
10. The applied overhead from Molding is computed as follows:
Job
P
Job
Q
g
11. The applied overhead from Fabrication is computed as follows:
Job
P
Job
Q
g
12. The unit product cost for Job P is computed as follows:
Direct materials …………………………………… $13,000
Direct labor ………………………………………… 21,000
Manufacturin
g
overhead applied:
13. The unit product cost for Job Q is computed as follows:
Direct materials …………………………………… $8,000
Direct labor ………………………………………… 7,500
Manufacturin
g
overhead applied:
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Solutions Manual, Chapter 2 17
The Foundational 15
14. The selling prices are calculated as follows:
Job
P
Job
Q
T
otal manufacturin
g
cost ………………………. $50,500 $30,800
T
15. The cost of goods sold is the sum of the manufacturing costs assigned
to Jobs P and Q:
T
T
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18 Managerial Accounting, 16th edition
Exercise 2-1 (10 minutes)
The estimated total manufacturing overhead cost is computed as follows:
Y = $94,000 + ($2.00 per DLH)(20,000 DLHs)
Estimated fixed manufacturin
g
overhead ……………… $ 94,000
The plantwide predetermined overhead rate is computed as follows:
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Solutions Manual, Chapter 2 19
Exercise 2-2 (10 minutes)
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20 Managerial Accounting, 16th edition
Exercise 2-3 (10 minutes)
1. Total direct labor-hours required for Job A-500:
Total manufacturing cost assigned to Job A-500:
Direct materials ………………………………………………. $231
Direct labor ……………………………………………………. 153
2. Unit product cost for Job A-500: