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 Estimated total machine-hours (MHS) 6,500 Estimated total fixed manufacturing overhead cost $ 24,000 Estimated variable manufacturing overhead cost $ 1.50 per MH Finishing 3,500 $ 6,800 $ 3.00 Total 10,000 $ 30,800 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 $18,000 $ 24,900 2,500 Job M $11,800 $11,200 4,000 Direct materials Direct labor cost Molding machine- hours Finishing machine-hours 1,000 2,500 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

Option B is correct. $82,140 calculation: we will calculate estimated total over head costs firstly, in two departments : Molding: Estimated Add: Estimated variable manufacturing overhead Estimated to tal manufacturing overhead costs Estimated variable manufacturing overhead fixed manufacturing overhead $24,000 $ 9750 $ 33,750 $ x $1.50 per MH X 6,500 MHA $9,750 finishing: Estimated fixed manufacturing overhead Add: Estimated variable manufacturing overhead $ 10,500 Estimated total manufacturing over head costs 1$ 17,300 Estimated variable manufacturing overhead = ($3.00 per MH x 3,500 MHA) $ 10,500 Now, Estimated total manufacturing overhead costs in two departments = ($33,750 of molding & $ 17, 300 of finishing) $ 51,050

$51,oso 10,ooo Now, we will calculate the plant wide predetermined Overhead rate: Estimated total manufacturing overhead cost Divide: Estimated total machine hours Predetermined overhead rate |$5.11 per MH Overhead applied to Job A: Overhead applied to a particular job = (predetermined overhead rate x Machine hours incurred by the job) $ 5.11 per MH X (2,500 MHA of Modding & 2,500 MHA of finishing) $ Sill per MH X 5,000 MHA $ 25,550 Job A's manufacturing costs. Direct Materials $ 18,000 Direet Labor coats $ 24,900 Manufacturing overhead applied $ 25, 5so Total Manufactusing cost $ 68, uso Now, the selling price for Job A. Selling Price for Job A = Total Manufacturing cost t Markup = $68, 450 + (20% * $68,450) $68,450 + $ 13,690 $82,140