Question

Collini Corporation has two production departments, Machining and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Machining Department's predetermined overhead rate is based on machine-hours and the Customizing Department's predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates: Machining 17,000 3,000 $102,000 $ 1.70 Customizing 15,000 6,080 $61,200 Machine-hours Direct labor-hours Total fixed manufacturing overhead cost Variable manufacturing overhead per machine-hour Variable manufacturing overhead per direct labor- hour $ 4.10 During the current month the company started and finished Job T268. The following data were recorded for this job Machining 30 Job T268: Machine-hours Direct labor-hours Direct materials Direct labor cost 30 Customizing 30 50 $ 380 $1,500 $ 720 $ 900 If the company marks up its manufacturing costs by 40% then the selling price for Job T268 would be closest to: (Round your Intermediate calculations to 2 decimal places.)

Answer 1

Predetermined Overhead rate

For Machining = (102,000/17,000)+1.70 = 7.70

For customizing = (61,200/6,000)+4.10 = 14.30

Total manufacturing cost

= Direct Materials + Direct Labor + Manufacturing Overhead applied

= (720+380)+(900+1500)+(80)*7.70+(50)*14.30

= 1100+2400+616+715

= 4831

Ut is given that the costs are marked up by 40%

= 4831+40%

= 6763.40