Question

14) Pembroke Corporation has two manufacturing ke Corporation has two manufacturing departments Machining and Finishing He company used the following data at the beginning of the period to calculate predetermined overhead rates (32 Points): Molding Fabrication Estimated total machine-hours (MH) 1,000 4,000 Estimated total fixed manufacturing overhead cost $4,200 $8,800 Estimated variable manufacturing overhead cost per MH $1.90 $2.90 During the period, the company started and completed two jobs--Job E and Job G. Data concerning those two jobs follow: Direct materials Direct labor cost Machining machine-hours Finishing machine-hours Job E $11,800 $19,200 600 1,600 Job G $8,000 $6,700 400 2,400 Required: Assume that the company uses departmental predetermined overhead rates with machine- hours as the allocation base in both departments. a. What is the departmental predetermined overhead rate in the Molding department? b. What is the departmental predetermined overhead rate in the Fabrication department? c. How much manufacturing overhead will be applied to Job E? d. How much manufacturing overhead will be applied to Job G? e. If Job E included 40 units, what was it's unit product cost? f. If Job G included 35 units, what was it's unit product cost? g. Assume that the company uses a markup of 80% on manufacturing cost to establish selling prices. Calculate the selling price per unit for Job E Assume that the company uses a markup of 50% on manufacturing cost to establish selling ices. Calculate the selling price per unit for Job G.

Answer 1

a.	Departmental overhead rate=Estimated total manufacturing overhead for the department/Estimated machine hours for the department
							Molding
	Estimated total machine hours used					a	1000
	Variable manufacturing overhead per machine hour					b	1.9
	Variable manufacturing overhead					c=a*b	1900
	Fixed manufacturing overhead					d	4200
	Total manufacturing overhead					e=c+d	6100
	Departmental overhead rate					f=e/a	6.10
b.	Departmental overhead rate=Estimated total manufacturing overhead for the department/Estimated machine hours for the department
							Fabrication
	Estimated total machine hours used					a	4000
	Variable manufacturing overhead per machine hour					b	2.9
	Variable manufacturing overhead					c=a*b	11600
	Fixed manufacturing overhead					d	8800
	Total manufacturing overhead					e=c+d	20400
	Departmental overhead rate					f=e/a	5.10
c.	Manufacturing overhead applied=Actual machine hours used*Departmental overhead rate
	Machining machine hours is used in molding department
	Finishing machine hours is used in fabrication department
						Job E
	Molding				(600*6.10)	3660
	Fabrication				(1600*5.10)	8160
	Total					11820
d.	Manufacturing overhead applied=Actual machine hours used*Departmental overhead rate
	Machining machine hours is used in molding department
	Finishing machine hours is used in fabrication department
						Job G
	Molding				(400*6.10)	2440
	Fabrication				(2400*5.10)	12240
	Total					14680
e.	Unit product cost:
						Job E
	Direct materials					11800
	Direct labor cost					19200
	Manufacturing overhead applied					11820
	Total manufacturing cost				a	42820
	Number of units				b	40
	Unit product cost				a/b	1070.5
f.	Unit product cost:
						Job G
	Direct materials					8000
	Direct labor cost					6700
	Manufacturing overhead applied					14680
	Total manufacturing cost				a	29380
	Number of units				b	35
	Unit product cost				a/b	839.43
g.	Selling price per unit=Unit product cost*180%=1070.5*180%=$ 1926.9
h.	Selling price per unit=Unit product cost*150%=839.43*150%=$ 1259.15