Question

Comans Corporation has two production departments, Milling and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Milling 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: Milling 21,000 14,000 $63,000 $ 2.00 Customizing 12,000 5,000 $24,000 Machine-hours Direct labor-hours Total fixed manufacturing overhead cost Variable manufacturing overhead per machine-hour Variable manufacturing overhead per direct labor- hour $ 5.00 During the current month the company started and finished Job A319. The following data were recorded for this job: Job A319: Machine-hours Direct labor-hours Direct materials Direct labor cost Milling 70 20 $ 590 $ 760 Customizing 30 40 $ 200 $ 600 If the company marks up its manufacturing costs by 10% then the selling price for Job A319 would be closest to: (Round your intermediate calculations to 2 decimal places.)

Answer 1

Answer:- Correct answer is $3,181 Explanations:- Milling 21,000 14.000 63,000 (Amount in $) Customizing 12,000 5,000 24,000 Particulars Machine Hours Direct Labour Hours Fixed Manufacturing overhead cost Fixed Manufacturing overhead rate: (63,000/21000), (24,000/5,000) Add: Variable Overhead rate Pre-determined overhead rate 3.00 2.00 5.00 4.80 5.00 9.80 Particulars Milling Machine Hours Direct Labour Hours Manufacturing overheads : Rate*Base 70 20 350 Customizing 30 40 392 Milling Particulars Overhead cost applied Direct Material Direct Labour cost Manufacturing cost Total Overhead cost applied Add: Mark Up @10% Selling Price 350 590 760 1,700 Customizing 392 200 600 1,192 2,892 289 3,181