Question

Stockmaster Corporation has two manufacturing departments--Forming and Assembly. The company used the following data at the beginning of the year to calculate predetermined overhead rates: Forming Assembly Total Estimated total machine-hours (MHs) 5,000 5,000 10,000 Estimated total fixed manufacturing overhead cost $27,000 $10,500 $37,500 Estimated variable manufacturing overhead cost per MH $1.10 $2.80During the most recent month, the company started and completed two jobs--Job C and Job H. There were no beginning inventories. Data concerning those two jobs follow: Job C Job HDirect materials $11,200 $7,500Direct labor cost $21,900 $7,800Forming machine-hours 3,400 1,600Assembly machine-hours 2,000 3,000Assume 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 C is closest to:a. $25,192b. $88,172c. $62,980d. $96,989

Answer 1

Answer:

Explanation:

Forming

Estimated fixed manufacturing overhead  $27,000

Estimated variable manufacturing overhead ($1.10*5,000)  $5,500

Estimated total manufacturing overhead cost  $32,500

Assembly

Estimated fixed manufacturing overhead  $10,500

Estimated variable manufacturing overhead ($2.80 × 5,000)  14,000

Estimated total manufacturing overhead cost  $24,500

Now we need to add these two numbers ($32,500 + $24,500 = $57,000) in order to identify plantwide predetermined manufacturing overhead rate

Estimated total manufacturing overhead cost  $57,000

Estimated total machine hours  10,000

Predetermined overhead rate  $5.70  [57,000/10,00]

The overhead applied to Job C:

Overhead applied to job C = Predetermined overhead rate x Machine-hours incurred by C

= $5.70 * (3,400 + 2,000)

= $5.70 x (5,400)

= $30,780

Job C’s manufacturing cost:

Direct materials  $11,200

Direct labor cost  $21,900

Manufacturing overhead $30,780

Total manufacturing cost  $63,880

The selling price for Job C:

Total manufacturing cost  $63,880

Markup (40%)  25,552

Selling price  $89,432