Question

Cull Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $358,400, variable manufacturing overhead of $2.30 per machine-hour, and 56,000 machine-hours. The company has provided the following data concerning Job X455 which was recently completed:
Number of units in the job 10
Total machine-hours 80
Direct materials $810
Direct labor cost $1,620

If the company marks up its unit product costs by 20% then the selling price for a unit in Job X455 is closest to: (Round your intermediate calculations to 2 decimal places.)

a. $379.92
b. $63.32
c. $316.60
d. $399.92

Answer 1

Answer:

The selling price for a unit in Job X455 is closest to a. $379.92

Explanation:

stimated total manufacturing overhead cost = Estimated total fixed manufacturing overhead cost + (Estimated variable overhead cost per unit of the allocation base × Estimated total amount of the allocation base)

= $358,400 + ($2.30 per machine-hour × 56,000 machine-hours)

= $358,400 + $128,800 = $487,200.

Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base

= $487,200 ÷ 56,000 machine-hours = $8.7 per machine-hour.

Overhead applied to a particular job

= Predetermined overhead rate × Amount of the allocation base incurred by the job

= $8.7 per machine-hour × 80 machine-hours = $696

Direct materials                                                          $810

Direct labor cost                                                       $1,620

Manufacturing overhead applied                             $696

Total cost of Job X455   (a)                                      $3,126

Number of units              (b)                                          10

Unit product cost                   (a) ÷ (b)                       $312.6

Markup (20% × $312.6)                                            $62.52

Selling price                                                             $375.12