Question

based on machine-hours. The company based its predetermined overhead rate for the current year on the following data:Total machine-hours 32,000Total fixed manufacturing overhead cost $ 352,000Variable manufacturing overhead per machine-hour $ 3.00Recently, Job T687 was completed with the following characteristics:Number of units in the job 10Total machine-hours 40Direct materials $ 675Direct labor cost $ 1,350If the company marks up its unit product costs by 40% then the selling price for a unit in Job T687 is closest to: (Round your intermediate calculations to 2 decimal places.)a. $283.50b. $103.40c. $361.90d. $546.00

Answer 1

Answer:

c. $ 361.90

Explanation:

Computation of Predetermined overhead rate based on machine hours

Estimated fixed machine overhead                           $ 352,000

Estimated Machine Hours                                                32,000 hours

Predetermined overhead rate = Estimated fixed machine overhead/ Estimated Machine hours

$ 352,000 / 32000 machine hours  = $ 11 per machine hour

Computation of total costs of Job T687

Direct materials                                                                                        $   675

Direct labour Cost                                                                                    $ 1,350

Fixed manufacturing overhead $ 11 per machine hour * 40 hours       $   440

Variable manufacturing overhead $ 3 per machine hour * 40 hours   $   120

Total manufacturing cost of Job T 687                                                  $ 2,585

No of units in Job T 687                                                                          10 units    

Average cost per unit                                                                           $ 258.50

Computation of selling price

mark up on cost = 40 %

Selling price per unit     $ 258.50 * 140 %      =                                  $ 361.90