Question

Moody Corporation uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates:

Machine-hours required to support estimated production		153,000
Fixed manufacturing overhead cost	$	659,000
Variable manufacturing overhead cost per machine-hour	$	4.90

Required:

1. Compute the plantwide predetermined overhead rate.

2. During the year, Job 400 was started and completed. The following information was available with respect to this job:

Direct materials	$	380
Direct labor cost	$	220
Machine-hours used		33

Compute the total manufacturing cost assigned to Job 400.

3. If Job 400 includes 60 units, what is the unit product cost for this job?

4. If Moody uses a markup percentage of 120% of its total manufacturing cost, then what selling price per unit would it have established for Job 400?

Answer 1

　

1) Predetermined overhead rate: $ 9.21 per MH

Working:

Estimated Fixed manufacturing overhead	659,000
Estimated Variable manufacturing overhead	749,700
($4.90 per MH × 153,000 MHs)
Estimated Total manufacturing overhead	1,408,700
Divided: Estimated total machine-hour	153,000
Predetermined overhead rate	9.21

2) Total manufacturing cost: $904

Working:

Direct materials	380
Direct labor	220
Manufacturing overhead applied ($9.21 per MH × 33)	304
Total manufacturing cost	904

3) Unit product cost: $15.07

Working:

Total manufacturing cost	904
Number of units in the job	60
Unit product cost	15.07

　

4) Selling price per unit: $33.15

Working:

Total manufacturing cost	904
Markup (120% of manufacturing cost)	1,085
Selling price for Job 400	1,989
Number of units in Job 400	60
Selling price per unit	33.15