Question

TB Problem Qu. 2-272 Kluth Corporation has two manufacturing ... Kluth Corporation has two manufacturing departments--Molding and Customizing. The company used the following data at the beginning of the year to calculate predetermined overhead rates: Estimated total machine-hours (MHS) Estimated total fixed manufacturing overhead cost Estimated variable manufacturing overhead cost per MH Molding Customizing 7,000 1,300 $18,200 $4,550 $ 1.50 $ 3.00 Total 8,300 $22,750 During the most recent month, the company started and completed two jobs--Job C and Job M. There were no beginning inventories. Data concerning those two jobs follow: Direct materials Direct labor cost Molding machine-hours Customizing machine-hours Job C Job M $13,900 $ 7,800 $21,000 $ 7,800 1,250 5,750 800 500 Required: Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. Further assume that the company uses a markup of 20% on manufacturing cost to establish selling prices. Calculate the selling prices for Job C and for Job M. (Do not round intermediate calculations.) Selling price for Job C Selling price for Job M

Answer 1

	Job C	Job M
Direct material	$13900	$7800
Direct labor	21000	7800
Variable manufacturing overhead cost (1250*1.50+800*3)	4275
(5750*1.50+500*3)		10125
Fixed manufacturing overhead costs (1250*2.6+800*3.5)	6050
(5750*2.6+500*3.5)		16700
Total cost	45225	42425
Markup (20% of total cost)	9045	8485
Selling price	54270	50910

Fixed manufacturing overhead costs:

Molding = 18200/7000 = $2.6 per MH

Customized = 4550/1300 = $3.5 per MH