Question

Comans Corporation has two production departments, Milling and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Milling Department’s predetermined overhead rate is based on machine-hours and the Customizing Department’s predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates:
Milling Customizing
Machine-hours 26,000 29,000
Direct labor-hours 11,000 5,000
Total fixed manufacturing overhead cost $ 153,400 $ 18,500
Variable manufacturing overhead per machine-hour $ 1.30
Variable manufacturing overhead per direct labor-hour $ 5.00
During the current month the company started and finished Job A319. The following data were recorded for this job:
Job A319: Milling Customizing
Machine-hours 70 30
Direct labor-hours 50 60
Direct materials $ 450 $ 190
Direct labor cost $ 580 $ 570
If the company marks up its manufacturing costs by 20% then the selling price for Job A319 would be closest to: (Round your intermediate calculations to 2 decimal places.)
Garrison 16e Rechecks 2017-06-22
a. $563
b. $2,816
c. $3,379
d. $4,055

Answer 1

Answer:

c. $3,379

Explanation:

Calculate the Product Costs first as follows:

Direct Materials :

Milling                                                                                          $ 450

Customizing                                                                                 $ 190

Direct Labor :

Milling                                                                                          $ 580

Customizing                                                                                $ 570

Variable Overheads :

Variable manufacturing overhead : Milling ($ 1.30 ×70)              $ 91

Variable manufacturing overhead : Customizing ($ 5.00×60) $300

Fixed Overheads :

Milling ( $ 153,400/ 26,000 × 70)                                                $413

Customizing ( $ 18,500/5,000 × 60)                                           $222

Total Cost                                                                                    $2,816

To find Selling Price add a 20% Mark -up on Cost

Total Cost               $2,816.00

Add Mark-up 20%    $563.20

Selling Price           $3,379.20