Answer:
Instructions are below.
Explanation:
Giving the following information:
Markup on job cost 75%
Milling Assembly
Machine-hours 60,000 3,000
Direct labor-hours 8,000 80,000
Total fixed manufacturing overhead cost $ 390,000 $500,000
Variable manufacturing overhead per machine-hour $2.00
Variable manufacturing overhead per direct labor-hour $3.75
Job 407:
Milling Assembly
Machine-hours 90 4
Direct labor-hours 5 20
Direct materials $800 $370
Direct labor cost $70 $280
1) We need to calculate the total overhead costs:
Milling= 390,000 + 2*60,000 + 3.75*8,000= $540,000
Assembly= 500,000 + 2*3,000 + 3.75*80,000= $806,000
2) Now, the predetermined overhead rate per department:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
For Milling we will use machine hours as allocation base:
Milling= 540,000/60,000= $9 per machine hour
For Assembly, we will use direct labor hours:
Assembly= 806,000/80,000= $10.075 per direct labor hour
3) We need to allocate overhead to Job 407
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Milling= 9*90= $810
Assembly= 10.075*20= $201.5
Total overhead= $1,011.5
4) Total cost= (800 + 370) + (70 + 280) + 1,011.5
Total cost= $2,531.5
5) Finally, the selling price:
Selling price= 2,531.5*1.75= $4,430.125
