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:

Molding Fabrication Total

Machine-hours. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000 30,000 50,000

Fixed manufacturing overhead costs . . . . . . . . . . . . . . $700,000 $210,000 $9100,000

Variable manufacturing overhead per machine-hour $3.00 $1.00

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

Job D-70: Molding Fabrication Total

Direct materials cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $375,000 $325,000 $700,000

Direct labor cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $200,000 $160,000 $360,000

Machine-hours. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,000 6,000 20,000

Job C-200: Molding Fabrication Total

Direct materials cost. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $300,000 $250,000 $550,000

Direct labor cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $175,000 $225,000 $400,000

Machine-hours. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000 24,000 30,000

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

Required:

1. Assume Smithson uses a plantwide overhead rate based on machine-hours.

a. Compute the predetermined plantwide overhead rate.

.b. Compute the total manufacturing costs assigned to Job D-70 and Job C-200.

c. If Smithson establishes bid prices that are 150% of total manufacturing costs, what bid price would it have established for Job D-70 and Job C-200?

d. What is Smithson's cost of goods sold for the year?

2. Assume Smithson uses departmental overhead rates based on machine-hours.

a. Compute the predetermined departmental overhead rates.

b. Compute the total manufacturing costs assigned to Job D-70 and Job C-200.

c. If Smithson establishes bid prices that are 150% of total manufacturing costs, what bid price would it have established for Job D-70 and Job C-200?

d. What is Smithson's cost of goods sold for the year?

3. What managerial insights are revealed by the computations that you performed in this problem? (Hint: Do the cost of goods sold amounts that you computed in requirements 1 and 2 differ from one another? Do the bid prices that you computed in requirements 1 and 2 differ from one another? Why?)