Question

Moody Corporation uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates: Machine-hours required to support estimated production 154,000 Fixed manufacturing overhead cost $ 656,000 Variable manufacturing overhead cost per machine-hour $ 4.50 Required: 1. Compute the plantwide predetermined overhead rate. 2. During the year, Job 400 was started and completed. The following information was available with respect to this job: Direct materials $ 390 Direct labor cost $ 240 Machine-hours used 35 Compute the total manufacturing cost assigned to Job 400. 3. If Job 400 includes 50 units, what is the unit product cost for this job? 4. If Moody uses a markup percentage of 120% of its total manufacturing cost, then what selling price per unit would it have established for Job 400?

Answer 1

Answer:

1. $ 8.76

2.$ 936.6

3.$ 18.70

4.$ 22.44

Explanation:

Estimates:

Machine hours  154,000

Fixed manufacturing overheads $ 656,000

Variable manufacturing overheads per machine hours $ 4.5

i) Overhead rate = total overheads/machine hours

=$ (154,000*4.5 +656,000)/154,000

=$ 8.76

ii) Direct materials $ 390

Direct labour      $ 240

Machine hours used= 35

Total overheads= machine hours*overhead rate=35*8.76=$ 306.6

Total manufacturing costs =direct costs + overheads

=$(390+240+306.60)=$ 936.6

iii) 50 units produced

Unit product cost= total costs/ units produced

=936.6/50

=$ 18.70

iv) If 120% markup is used what applied on total manufacturing the selling price per unit

Cost per unit =$ 18.7

Markup= gross profit/costs

120%=GP/18.7*100

120*18.7/100

=$ 22.44