Question

Opunui Corporation has two manufacturing departments--Molding and Finishing. The company used the following data at the beginning of the year to calculate predetermined overhead rates: Molding Finishing Total Estimated total machine-hours (MHs) 6,500 3,500 10,000 Estimated total fixed manufacturing overhead cost $ 23,000 $ 4,600 $ 27,600 Estimated variable manufacturing overhead cost per MH $ 2.00 $ 4.00 During the most recent month, the company started and completed two jobs--Job A and Job M. There were no beginning inventories. Data concerning those two jobs follow: Job A Job M Direct materials $ 15,800 $ 9,500 Direct labor cost $ 22,800 $ 9,400 Molding machine-hours 2,500 4,000 Finishing machine-hours 2,500 1,000 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. The calculated selling price for Job A is closest to: (Round your intermediate calculations to 2 decimal places.)

Answer 1

Selling Price of Job A is $62,520.

Working notes:

	Molding (A)	Finishing (B)	Total (A+ B)
Estimated variable manufacturing overhead cost per MH (a)	$2	$4	$6
Estimated total machine hours (b)	6,500	3,500	10,000
Total Estimated Manufacturing overhead (c = a*b)	$13,000	$14,000	$27,000
Predetermined Overhead Rate ($27,000 / 10,000 hours)			$2.70
	Job A
Direct materials	$15,800
Direct labor	$22,800
Manufacturing Overhead (2,500 hours + 2,500 = 5,000 hours * $2.70)	$13,500
Total Manufacturing Cost	$52,100
Add: Mark Up Cost ($52,100*20/100)	$10,420
Selling Price	$62,520