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		Finishing		Total
Estimated total machine-hours (MHs)		6,500		3,500		10,000
Estimated total fixed manufacturing overhead cost	$	27,000	$	6,500	$	33,500
Estimated variable manufacturing overhead cost per MH	$	1.00	$	2.00

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		Job M
Direct materials	$	17,600	$	11,500
Direct labor cost	$	24,500	$	10,900
Molding machine-hours		2,500		4,000
Finishing machine-hours		2,500		1,000

Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours and uses a markup of 40% 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

Molding Department:

Estimated manufacturing overhead = Estimated variable manufacturing overhead per machine hour * Estimated machine hours + Estimated fixed manufacturing overhead
Estimated manufacturing overhead = $1.00 * 6,500 + $27,000
Estimated manufacturing overhead = $33,500

Fabricating Department:

Estimated manufacturing overhead = Estimated variable manufacturing overhead per machine hour * Estimated machine hours + Estimated fixed manufacturing overhead
Estimated manufacturing overhead = $2.00 * 3,500 + $6,500
Estimated manufacturing overhead = $13,500

Total estimated manufacturing overhead = $33,500 + $13,500
Total estimated manufacturing overhead = $47,000

Predetermined overhead rate = Total estimated manufacturing overhead / Total estimated machine hours
Predetermined overhead rate = $47,000 / 10,000
Predetermined overhead rate = $4.70 per machine hour

Job A:

Manufacturing overhead applied = Predetermined overhead rate * Actual machine hours
Manufacturing overhead applied = $4.70 * 5,000
Manufacturing overhead applied = $23,500

Total manufacturing cost = Direct materials + Direct labor + Manufacturing overhead applied
Total manufacturing cost = $17,600 + $24,500 + $23,500
Total manufacturing cost = $65,600

Selling price = Manufacturing cost + Markup
Selling price = $65,600 + 40% * $65,600
Selling price = $91,840