Problem 3 Job Order Costing, plantwide department overhead rates RGS Company manufactures custom ordered widgets and uses a job order costing system with a plantwide predetermined overhead rate based on machine hours At the beginning of the year, the company estimated that 55,000 machine hours would be required for the periods estimated level of production It also estimated $960,000 of fixed manufacturing overhead cost for the coming period and variable manufacturing overhead of $4 00 per machine hour Because RGS has two manufacturing departmentsMixing and Foldingit is considering replacing its plantwide overhead rate with departmental rates that would also be based on machine hours The company gathered the following information to enable calculating departmental overhead rates Mixing estimated 22,000 machine hours and $740,000 in fixed manufacturing overhead Folding estimated 33,000 machine hours and $220,000 in fixed manufacturing overhead During the year, the company had no beginning or ending inventories and it started, completed, and sold only two jobsJob Ethel 70 and Job Fred 200 It provided the following information related to those two jobs Job Ethel Mixing Folding Total Direct materials cost $ 370,000 $ 320,000 $ 690,000 Direct labor cost $ 240,000 $ 160,000 $ 400,000 Machine hours 13,000 9,000 22,000 Job Fred Mixing Folding Total Direct materials cost $ 300,000 $ 220,000 $ 520,000 Direct labor cost $ 160,000 $ 240,000 $ 400,000 Machine hours 9,000 24,000 33,000 RGS had no underapplied or overapplied manufacturing overhead during the year Required 1 Assume RGS uses plantwide predetermined overhead rates based on machine hours a Compute the plantwide predetermined overhead rate b Compute the total manufacturing cost assigned to Job Ethel and Job Fred c If RGS establishes bid prices that are 150 of total manufacturing costs, what bid prices would it have established for Job Ethel and Job Fred d What is RGSs cost of goods sold for the year 2 Now, assume that instead of a plantwide overhead rate, RGS uses departmental predetermined overhead rates based on machine hours in each department a Compute the departmental predetermined overhead rates b Compute the total manufacturing cost assigned to Job Ethel and Job Fred Each job will have overhead applied in each department c If RGS establishes bid prices that are 150 of total manufacturing cost, what bid prices would it have established for Job Ethel and Job Fred d What is RGSs cost of goods sold for the year

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Problem 3 Job Order Costing, plantwide & department overhead rates - RGS Company manufactures custom ordered widgets and uses a job-order costing system with a

Problem 3 Job Order Costing, plantwide & department overhead rates - RGS Company manufactures custom ordered widgets and uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours.

At the beginning of the year, the company estimated that 55,000 machine-hours would be required for the periods estimated level of production. It also estimated $960,000 of fixed manufacturing overhead cost for the coming period and variable manufacturing overhead of $4.00 per machine-hour.

Because RGS has two manufacturing departmentsMixing and Foldingit is considering replacing its plantwide overhead rate with departmental rates that would also be based on machine-hours. The company gathered the following information to enable calculating departmental overhead rates:

Mixing - estimated 22,000 machine hours and $740,000 in fixed manufacturing overhead.
Folding estimated 33,000 machine hours and $220,000 in fixed manufacturing overhead.

During the year, the company had no beginning or ending inventories and it started, completed, and sold only two jobsJob Ethel-70 and Job Fred-200. It provided the following information related to those two jobs:

Job Ethel	Mixing	Folding	Total
Direct materials cost	$ 370,000	$ 320,000	$ 690,000
Direct labor cost	$ 240,000	$ 160,000	$ 400,000
Machine-hours	13,000	9,000	22,000

Job Fred	Mixing	Folding	Total
Direct materials cost	$ 300,000	$ 220,000	$ 520,000
Direct labor cost	$ 160,000	$ 240,000	$ 400,000
Machine-hours	9,000	24,000	33,000

RGS had no underapplied or overapplied manufacturing overhead during the year.

Required: 1. Assume RGS uses plantwide predetermined overhead rates based on machine-hours.

a. Compute the plantwide predetermined overhead rate.

b. Compute the total manufacturing cost assigned to Job Ethel and Job Fred.

c. If RGS establishes bid prices that are 150% of total manufacturing costs, what bid prices would it have established for Job Ethel and Job Fred?

d. What is RGSs cost of goods sold for the year?

2. Now, assume that instead of a plantwide overhead rate, RGS uses departmental predetermined overhead rates based on machine-hours in each department.

a. Compute the departmental predetermined overhead rates.

b. Compute the total manufacturing cost assigned to Job Ethel and Job Fred. Each job will have overhead applied in each department.

c. If RGS establishes bid prices that are 150% of total manufacturing cost, what bid prices would it have established for Job Ethel and Job Fred?

d. What is RGSs cost of goods sold for the year?