Question

Moody Corporation uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates:

Machine-hours required to support estimated production		153,000
Fixed manufacturing overhead cost	$	652,000
Variable manufacturing overhead cost per machine-hour	$	4.40

Required:

1. Compute the plantwide predetermined overhead rate.

2. During the year, Job 400 was started and completed. The following information was available with respect to this job:

Direct materials	$	370
Direct labor cost	$	260
Machine-hours used		34

Compute the total manufacturing cost assigned to Job 400.

3. If Job 400 includes 60 units, what is the unit product cost for this job?

4. If Moody uses a markup percentage of 120% of its total manufacturing cost, then what selling price per unit would it have established for Job 400?

Answer 1

1) Predetermined overhead rate:
Fixed Manufacturing overhead cost per machine hour ($652,000/153,000)	$4.26
Add: Variable manufacturing overhead cost per machine hour	$4.40
Predetermined Overhead Rate	$8.66
2)
Direct materials	$370
Add: Direct labor	$260
Add: Manufacturing overheads costs (34 machine hours * $8.66)	$294
Total Manufacturing Overheads	$924
3)
Direct materials	$370
Add: Direct labor	$260
Add: Manufacturing overheads costs (36 machine hours * $8.66)	$312
Total Manufacturing Overheads	$942
4)
Total Manufacturing Costs (a)	$942
Selling price ($942*120/100)	$1,130