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		10,000
Direct labor-hours		11,000		8,000
Total fixed manufacturing overhead cost	$	91,000	$	44,000
Variable manufacturing overhead per machine-hour	$	2.00
Variable manufacturing overhead per direct labor-hour			$	4.40

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		40		30
Direct labor-hours		30		40
Direct materials	$	400	$	200
Direct labor cost	$	570	$	600

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.)

Multiple Choice

• $3,436

• $2,863

• $2,386

• $477

Answer 1

Machine Hours Direct labor hour Fixed Manufacturing overhead cost Fixed Manufacturing overheads Rate : (91000/26000, 44000/8000) ADD: Variable overhead rate Perdetermined overhead rate Milling Customizing 26000 10000 110001 8000 910001 44000 3.50 5.50 2.00 5.50 Milling 5.50 4.40 9.90 Customizing 9.90 Predetermined overhead rate 30 Machine Hours Direct labor hour Manufacturing overheads : Rate * Base Overhead Cost Applied Direct Material Direct Labor cost Manufactruing Cost Total overhead Cost applied ADD: Markup 20% Selling Price Milling Customizing 40 301 40 2201 396 Milling Customizing 220 396 400 200 570 600 1190 1196 2386 477.2 2863.2 Answer: $2,863