Question

Opunui Corporation has two manufacturing departments--Molding and Finishing. The company used the following data at the beginning of the year to calculate predetermined overhead rates:
Molding Finishing Total
Estimated total machine-hours (MHs) 3,250 3,000 6,250
Estimated total fixed manufacturing overhead cost $27,000 $4,700 $31,700
Estimated variable manufacturing overhead cost per MH $ 1.00 $ 2.00
During the most recent month, the company started and completed two jobs--Job A and Job M. There were no beginning inventories. Data concerning those two jobs follow:
Job A Job M
Direct materials $15,900 $ 9,700
Direct labor cost $ 23,000 $ 9,500
Molding machine-hours 1,250 2,000
Finishing machine-hours 1,750 500
Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours and uses a markup of 30% on manufacturing cost to establish selling prices. The calculated selling price for Job A is closest to: (Round your intermediate calculations to 2 decimal places.)
a) $58,550
b) $99,500
c) $76,115
d) $17,565

Answer 1

Answer:

Results are below.

Explanation:

Giving the following information:

Estimated total machine-hours (MHs)= 6,250

Estimated total fixed manufacturing overhead cost= $31,700

Estimated variable manufacturing overhead cost= (1*3,250 + 2*3,000)= $9,250

Job A

Direct materials $15,900

Direct labor cost $ 23,000

Molding machine-hours 1,250

Finishing machine-hours 1,750

First, we need to calculate the predetermined overhead rate:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Predetermined manufacturing overhead rate= (31,700 + 9,250)/6,250

Predetermined manufacturing overhead rate= $6.55 per machine hour

Now, we can calculate the total cost of Job A:

Total cost= 15,900 + 23,000 + 6.55*3,000

Total cost= $58,550

Finally, the selling price for Job A:

Selling price= 58,550*1.3= $76,115