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 1,750 5,000 Estimated total fixed manufacturing overhead cost $ 20,000 $ 5,600 $ 25,600 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 $ 17,000 $ 10,700 Direct labor cost $ 23,800 $ 10,400 Molding machine-hours 1,250 2,000 Finishing machine-hours 1,250 500 Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours and uses a markup of 40% on manufacturing cost to establish selling prices. The calculated selling price for Job A is closest to: (Round "Predetermined overhead rate" to 2 decimal places.)

Answer 1

Answer:

The calculated selling price for Job A is closest to: $80,290

Explanation:

Predetermined Overhead Rate = Budgeted Fixed Overheads / Budgeted Activity

                                                    = $ 25,600 / 5,000

                                                    = $5.12 per machine hour.

Manufacturing Cost Statement for Job A

Direct materials                                          $17,000

Direct labor cost                                        $23,800

Variable manufacturing overhead :

Molding ($ 1.00 × 1,250)                              $1,250

Finishing ($ 2.00 × 1,250)                           $2,500

Fixed Manufacturing Overheads

Molding ($5.12 × 1,250)                              $6,400  

Finishing ($5.12 × 1,250)                            $6,400

Total Manufacturing Cost                        $57,350

Calculation of Selling Price

Total Manufacturing Cost                        $57,350

Add Mark -up ($57,350 × 40%)               $22,940

Selling Price                                             $80,290