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 Fixed manufacturing overhead cost Variable manufacturing overhead cost per machine-hour 151,000 $ 651,000 $ 4.30 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 Direct labor cost Machine-hours used $ 390 $ 250 38 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 110% of its total manufacturing cost, then what selling price per unit would it have established for Job 400?

Answer 1

1.

Predetermined overhead rate = Variable overhead cost per machine hour + Fixed overhead cost/Estimated machine hours

= 4.30 + 651,000/151,000

= 4.30 + 4.31

= $8.61 per machine hour

Predetermined overhead rate

$8.61

per MH

2.

Overhead applied = Actual machine hours used x  Predetermined overhead rate

= 38 x 8.61

= $327.18

Job cost sheet

Direct material	390
Direct labor	250
Overhead applied	327.18
Total cost	$967.18

Total manufacturing cost

$967.18

3.

Unit product cost = Total manufacturing cost / Number of units

= 967.18/60

= $16

Unit product cost

$16

4.

Markup percentage = 110% of total job cost

Mark up = 967.18 x 110%

= $1,063.90

Total sales value = Total cost + Mark up

= 967.18+1,063.90

= $2,031.08

Selling price per unit  = Total sales value /Number of units

=2,031.08/60

= $34

Selling price per unit

$34

Note: Exact answer may slightly differ due to rounding off

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