Question

Hultquist Corporation has two manufacturing departments--Forming and Customizing. The company used the following data at the beginning of the period to calculate predetermined overhead rates:

	Forming		Customizing		Total
Estimated total machine-hours (MHs)		3,000		7,000		10,000
Estimated total fixed manufacturing overhead cost	$	10,500	$	18,200	$	28,700
Estimated variable manufacturing overhead cost per MH	$	1.00	$	2.00

During the period, the company started and completed two jobs--Job C and Job L. Data concerning those two jobs follow:

	Job C		Job L
Direct materials	$	15,800	$	9,300
Direct labor cost	$	22,600	$	9,500
Forming machine-hours		2,500		500
Customizing machine-hours		2,500		4,500

Required:

a. Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. Calculate that overhead rate. (Round your answer to 2 decimal places.)

b. Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. Calculate the amount of manufacturing overhead applied to Job L. (Do not round intermediate calculations.)

c. Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. Calculate the total manufacturing cost assigned to Job L. (Do not round intermediate calculations.)

d. Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours and uses a markup of 20% on manufacturing cost to establish selling prices. Calculate the selling price for Job L. (Do not round intermediate calculations.)

e. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both departments. What is the departmental predetermined overhead rate in the Forming department? (Round your answer to 2 decimal places.)

f. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. What is the departmental predetermined overhead rate in the Customizing department? (Round your answer to 2 decimal places.)

g. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. How much manufacturing overhead will be applied to Job L? (Do not round intermediate calculations.)

h. 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 price for Job L. (Do not round intermediate calculations.)

Answer 1

A) plant wide overhead rate calculation

Particulars	Amount
Variable overhead
- forming(3000*$1)	$3000
- customizing (7000*$2)	$14000
Fixed overhead	$28700
Total overhead	$45700
÷ total hours	10000 hours
Plant wide overhead rate	$4.57 per hour

B) overhead applied to job L

= Total machine hours * overhead rate

= (4500+500)*$4.57

=$22850

C) Total cost of JOB L assigned

= Material + labor + overhead

= $15800 + $22600 + $22850

= $61250

D) selling price of job L = $61250 + 20% markup

= $73500

E) department overhead rate forming department

Overhead = (3000*$1) +$10500 = $13500

Rate = $13500/3000

= $4.50 per machining machine hour

F) customizing department

Overhead = (7000*$2) + $18200

= $32200

Rate = $32200/7000 = $4.60

G) job L

Machining department overhead = 500*$4.50 = $2250

Finishing department = 4500*$4.60 = $20700

Total overhead = $22950

H) Cost of JOB L

= Material+labor +overhead

= $15800 + $22600 + $22950

= $61350

Selling price = $61350+20% = $73620

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